Summary Proceedings - The World...

2003 ANNUAL MEETINGS

OF THE

BOARDS OF GOVERNORS

Summary Proceedings

Dubai, United Arab EmiratesSeptember 23–24, 2003

THE WORLD BANK GROUP

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Headquarters1818 H Street, N.W.Washington, D.C. 20433, U.S.A.

Telephone: (202) 473-1000Facsimile: (202) 477-6391Website: www.worldbank.org

Cable AddressWorld Bank: INTBAFRADIFC: CORINTFINIDA: INDEVASMIGA: MIGAVEST

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Administrator

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2003 ANNUAL MEETINGS OF THE

BOARDS OF GOVERNORS

SUMMARY PROCEEDINGS

DUBAI, UNITED ARAB EMIRATESSEPTEMBER 23–24, 2003

INTRODUCTORY NOTE

The 2003 Annual Meetings of the Boards of Governors of the WorldBank Group, which consists of the International Bank for Reconstruc-tion and Development (IBRD), International Finance Corporation(IFC), International Development Association (IDA), MultilateralInvestment Guarantee Agency (MIGA) and International Centre forthe Settlement of Investment Disputes (ICSID), held jointly with thatof the International Monetary Fund, took place during September 23rdand 24th, 2003 in Dubai, United Arab Emirates. The Honorable KasparVilliger, Governor of the Bank and the Fund for Switzerland, served asthe Chairman.

The Summary Proceedings record, in alphabetical order by membercountries, the texts of statements by Governors, and resolutionsadopted by the Boards of Governors of the World Bank Group. Thetexts of statements concerning the IMF are published separately by theFund.

W. Paatii Ofosu-AmaahVice President and Corporate Secretary

THE WORLD BANK GROUPWashington, D.C.June, 2004

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CONTENTS

Page

Remarks by the H.H. Sheikh Hamdan Bin RashidAl Maktoum, Deputy Ruler of Dubai and Minister of Finance and Industry, United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Opening Address by the Chairman Kaspar VilligerGovernor of the Bank and the Fund for Switzerland . . . 5

Annual Address by James D. WolfensohnPresident of the World Bank Group . . . . . . . . . . . . . . . 11

Report by Trevor ManuelChairman of the Development Committee . . . . . . . . . 19

Statements by Governors and Alternate Governors . . . . . . . 22

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Afghanistan . . . . . . . . 22Australia . . . . . . . . . . . 23Belarus . . . . . . . . . . . . 29Belgium . . . . . . . . . . . 32Bosnia and . . . . . . . . .Herzegovina . . . . . . . 37

*Burkina Faso . . . . . . . 41Cambodia . . . . . . . . . . 50Canada . . . . . . . . . . . . 53China . . . . . . . . . . . . . 57Croatia . . . . . . . . . . . . 60Cyprus . . . . . . . . . . . . 62Fiji . . . . . . . . . . . . . . . . 64France . . . . . . . . . . . . . 68Germany . . . . . . . . . . 71Greece . . . . . . . . . . . . 72

*Guyana . . . . . . . . . . . . 76*Iceland . . . . . . . . . . . . 79

*Iceland . . . . . . . . . . . . 83India . . . . . . . . . . . . . . 87Indonesia . . . . . . . . . . 91Iran, Islamic Republic of . . . . . . . . . . . . . . . . 94

Ireland . . . . . . . . . . . . 96Israel . . . . . . . . . . . . . . 98Italy . . . . . . . . . . . . . . . 100Japan . . . . . . . . . . . . . 104Korea . . . . . . . . . . . . . 110Lao People’s DemocraticRepublic . . . . . . . . . . 113

*Latvia . . . . . . . . . . . . . 116Libya . . . . . . . . . . . . . . 117Macedonia, FYR . . . . 119Malaysia . . . . . . . . . . . 123Malta . . . . . . . . . . . . . 126Myanmar . . . . . . . . . . 128

* Speaking on behalf of a group of countries.

Concluding Remarks by James D. Wolfensohn . . . . . . . . . . 199Concluding Remarks by the Chairman Kaspar Villiger . . . 202Remarks by Lim Hng Kiang, Governor

of the Bank for Singapore . . . . . . . . . . . . . . . . . . . . . . . . 204

Documents of the Boards of Governors . . . . . . . . . . . . . . . 205Schedule of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 205Provisions Relating to the Conduct of the Meetings . . 206Agendas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

Joint Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . . . 208Report I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209Report III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211

MIGA Procedures Committee . . . . . . . . . . . . . . . . . . . . . . . 213Report I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Resolutions Adopted by the Board of Governorsof the Bank Between the 2002 and 2003Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

No. 550 First Amendment to the Agreement for the Establishment of the Joint Vienna Institute . . . . . . . . . . . . . . . . . . . . . . . 216

No. 551 Direct Remuneration of Executive Directors and their Alternates . . . . . . . . . . . 216

Resolutions Adopted by the Board of Governorsof the Bank at the 2003 Annual Meetings . . . . . . . . . . . 217

No. 552 Financial Statements, Accountants’ Report and Administrative Budget . . . . . . . . . . . . . . 217

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Nepal . . . . . . . . . . . . . 131Netherlands . . . . . . . . 134New Zealand . . . . . . . 136Pakistan . . . . . . . . . . . 138

*Palau . . . . . . . . . . . . . . 141Papua New Guinea . . 145Paraguay . . . . . . . . . . . 149Philippines . . . . . . . . . 151Poland . . . . . . . . . . . . . 153Portugal . . . . . . . . . . . 155Russian Federation . . 157

Spain . . . . . . . . . . . . . . 164Sri Lanka . . . . . . . . . . 167Thailand . . . . . . . . . . . 169Tonga . . . . . . . . . . . . . 172Turkey . . . . . . . . . . . . 174Ukraine . . . . . . . . . . . 176

*United Arab Emirates 179United Kingdom . . . . 185United States . . . . . . . 193Venezuela . . . . . . . . . . 195Vietnam . . . . . . . . . . . 196

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*Speaking on behalf of a group of countries.

No. 553 Allocation of FY03 Net Income . . . . . . . . . . 217No. 554 Forthcoming Annual Meetings

of the Boards of GovernorsChange of 2004 Annual Meetings Dates . . . 218

No. 555 Resolution of Appreciation . . . . . . . . . . . . . . 218

Resolutions Adopted by the Board of Governors of IFCat the 2003 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . 219


No. 238 Membership of Bhutan . . . . . . . . . . . . . . . . . 219No. 239 Resolution of Appreciation . . . . . . . . . . . . . . 221

Resolutions Adopted by the Board of Governors of IDAat the 2003 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . 222



Resolutions Adopted by the Council of Governors of MIGA Between the 2002 and 2003 Annual Meetings . . 223

No. 64 Amendment to Resolution No. 57 of the Council of Governors . . . . . . . . . . . . . . 223

No. 65 Amendment to MIGA’s By-Laws with Respect to Financial Statements . . . . . . 224

Resolutions Adopted by the Council of Governors of MIGA at the 2003 Annual Meeting . . . . . . . . . . . . . . 225

No. 66 Financial Statements and Accountants’ Report . . . . . . . . . . . . . . . . 225


Reports of the Executive Directors of the Bank . . . . . . . . . 226First Amendment to the Agreement for

the Establishment of the Vienna Institute . . . . . . . . 226Allocation of FY03 Net Income . . . . . . . . . . . . . . . . . . 229

Report of the Board of Directors of IFC . . . . . . . . . . . . . . . 230Membership of Bhutan . . . . . . . . . . . . . . . . . . . . . . . . . 230

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Page

Reports of the Board of Directors of MIGA . . . . . . . . . . . . 231Proposed Amendment to Resolution No. 57

of the Council of Governors . . . . . . . . . . . . . . . . . . . 231Proposal to Amend MIGA’s By-Laws with Respect

to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 245

Accredited Members of Delegations at the 2003 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248

Accredited Members of Delegations (MIGA)at the 2003 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . 273

Observers at the 2003 Annual Meetings . . . . . . . . . . . . . . . 284

Executive Directors and Alternates, IBRD, IFC, IDA . . . 289

Directors and Alternates, MIGA . . . . . . . . . . . . . . . . . . . . . 291

Officers of the Boards of Governors and Joint Procedures Committee for 2003–04 . . . . . . . . . . . . . . . . 293

Officers of the MIGA Council of Governors and Procedures Committee for 2003–04 . . . . . . . . . . . . . 294

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STATEMENT BY H.H. SHEIKH HAMDAN BIN RASHID AL MAKTOUM

DEPUTY RULER OF DUBAI ANDMINISTER OF FINANCE AND INDUSTRY

UNITED ARAB EMIRATES

Your Highnesses, Mr. Chairman, Governors, Mr. Wolfensohn, Mr. Köhler, ladies, and gentlemen, I have the great honor to welcomeyou to the United Arab Emirates, on behalf of His Highness SheikhZayed bin Sultan Al Nahyan, President of the UAE; His Highness SheikhMaktoum bin Rashid Al Maktoum, Vice-President, Prime Minister, andRuler of Dubai; and the members of the Federal Supreme Council; onthe occasion of the 2003 Annual Meetings of the Boards of Governors ofthe World Bank Group and the International Monetary Fund.

This gathering of representatives from the Bank and Fund’s 184members symbolizes the equality of all the peoples of the world, andunderscores that the problems and challenges facing the global econ-omy and the international financial system today are of concern to allcountries and can only be addressed effectively through cooperationand if all of our voices are heard. The Annual Meetings are for the firsttime being convened in an Arab country, and we hope that this will bethe first of many such gatherings in our part of the world. The selectionof the United Arab Emirates as host for your meetings recognizes thatthis region is an integral part of the world economy and a key player intoday’s multilateral system.

The Arab world is a region of tremendous richness, diversity, andpotential, bound together by close historical and cultural ties. It is oneof the oldest centers of learning and tolerance, and the birthplace ofmany of the world’s magnificent civilizations and religions. Most impor-tantly, it is filled with talented and resourceful people who have a strongdesire to contribute to the progress and prosperity of mankind. But thispart of the world will not be able to realize its full economic potentialuntil a just and permanent solution to the regional conflict is found andthe international community makes a serious effort to bring peace andsecurity to the region.

In Iraq, rays of hope are starting to emerge for a free society foundedon the rule of law. A stable Iraq, at peace with itself and with its neigh-bors, is in the collective interest of all of us, particularly those of us in thisregion of the world. Iraq must once again become stable, prosperous,and a responsible partner in the international community, and the Iraqipeople must be free to determine their own political future and controltheir own natural resources. We believe that the international commu-nity must contribute to the reconstruction of Iraq in all areas.

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Moreover, the present situation in the occupied Palestinian territo-ries is sadly marked by deteriorating living conditions and increasingsocial and economic despair. Without a lasting settlement that guaran-tees justice, peace, and security to all the peoples of the region, as wellas an independent state to the Palestinian people, instability will con-tinue to undermine economic progress in this part of the world. Theinternational community must do its utmost to help the Palestinianpeople build a better future for themselves.

The United Arab Emirates has been completely transformed sinceits formation in 1971. A relatively undeveloped region has become, asyou can see, a modern state that enjoys a high standard of living and iswell integrated with the rest of the world. The UAE serves as an excel-lent example of what a country can accomplish if it pursues economicliberalization, creates an environment conducive to private sector activ-ity, and preserves political and social stability. This success is a result ofthe government’s policy of diversifying revenue sources by supportingand encouraging the non-oil sector and investments in the domestic andforeign private sectors. Our country has become a model of how tocombine the technologies and advances of the western world with thetraditions and values of the east. We are proud that the UAE is in manyways a melting pot of nationalities and cultures, with people from allover the world working together in harmony.

We realize that as we move forward and try to accelerate growth, wewill have to diversify further our economy and export base. As part ofthis strategy, the government is working to create a suitable investmentclimate that will enable Dubai to become an international financialcenter as well as a popular tourist destination in the years to come.However, we recognize that we are in the early stages and that muchremains to be done. We must continue to develop our infrastructure,legislation, and business climate if we are to attract additional invest-ments and absorb our growing labor force.

In this regard, we applaud the efforts of the IMF and the WorldBank and their cooperation with local institutions in the UAE, whichhave enabled us to benefit greatly from the experience and expertise ofthe two international organizations. While the United Arab Emirates isblessed with vast oil and gas reserves, we recognize that it is our citizenswho are our most valuable resource and the real wealth of our country.The government has sought to develop the nation’s human resourcesand improve living standards by providing education, health care, andequal employment opportunities for men and women. In the wise andwell-known words of our president, His Highness Sheikh Zayed binSultan Al Nahyan, “Wealth is of no real value unless is it used to servethe people.” This strategy has enabled the UAE to obtain a high rank-ing in the UNDP’s Human Development Index.

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The United Arab Emirates is deeply committed to internationalcooperation and continuing its support of development efforts in devel-oping countries. The government has a well-established policy of pro-viding assistance to developing countries in the form of grants andunrestricted development aid. It provided AED106 billion in assistancethrough end-2002 to a number of developing countries, of which over75 percent was in the form of grants. The government has also providedmaterial assistance through the Abu Dhabi Fund for Development, aswell as multilateral regional and international organizations and funds,thus demonstrating its firm commitment to international cooperation.

Reducing the levels of poverty in many parts of the world remainsan issue of the utmost importance. Despite the commitments made bythe international community in this respect, over three billion peoplestill live in abject poverty, earning less than two dollars a day and lack-ing even the barest essentials. Greater efforts to achieve developmentgoals must be made in the new millennium, and it is disappointing to seethat flows of official development assistance have been declining. It iscritical that the developed countries honor their shared objective ofproviding 0.7 percent of their GNP as official development assistance ifthe Millennium Development Goal of reducing poverty by half by 2015is to be met, along with working to reduce the debt burden.

But increased official development assistance by the advanced coun-tries is not by itself sufficient to reduce poverty; generous technicalassistance is also needed to help developing countries build their humancapital. Successful and durable economic development requires notonly aid, but also the empowerment of, and investment in, people sothat they can make a meaningful contribution to the development oftheir society and realize their aspirations. For their part, developingcountries have to increase investment in the education and training oftheir own citizens.

In this regard, we applaud the role of the World Bank in focusing itsstrategy on poverty reduction and we call for further efforts to increasethe size of loans, credits, and private sector support in future years,while continuing efforts to achieve development goals, simplify proce-dures, and reduce the debt burden of the borrowing countries.

We also welcome the IMF’s initiative to review the substance ofreform programs, aimed at focusing on a limited number of pivotal con-ditions clearly linked to macroeconomic objectives, thus helpingmember countries adopt reform policies and improve their economicperformance. This will also encourage countries to seek advice andassistance from the Fund before their problems get out of control.

No meaningful discussion of poverty reduction can take place unlessit addresses the issue of trade, as a more open trading system will helppoor countries achieve sustainable development. In this regard, a critical

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contribution to poverty reduction can be made if the advanced economiesimprove market access for developing country exports and reducetrade-distorting subsidies, which cause greater hunger and poverty indeveloping countries throughout the world.

It was hoped that progress in this important area would be achievedduring the recent meeting of the World Trade Organization in Cancun.As this did not happen, we look forward to continued negotiations andwe hope that the Board of Governors will issue a positive statement onthe determination of all countries to cooperate on this crucial issue.

Embracing free trade is equally important for developing countries.Their implementation of more open trade policies can potentially boostdomestic productivity through increased competition, spur foreigndirect investment, create employment opportunities, and thereby raisethe overall standard of living.

The free flow of trade should also be accompanied by the steadytransfer of the modern technologies of the developed world to develop-ing countries. It is regrettable that the technological gap between devel-oped and developing countries is growing larger. The lack of technicalassistance and technology is unfortunately denying developing coun-tries a chance to participate fully in the global economy. As foreigndirect investment is the main external driver for technology transfer,developing countries will need to create a domestic climate even moreconducive to private sector activity if they wish to receive higher levelsof FDI flows and reduce this technology gap.

We all agree that we would like to live in a world free of poverty andconflict. A much stronger and more determined international effortwith the full participation of both developed and developing countries isnecessary if we are one day to live in such a world. It is only by workingtogether and cooperating with one another that the nations of the worldcan achieve the goals that they cannot realize separately or in conflictwith each other.

I wish you all the very best as you carry out your very important delib-erations over the next few days. I hope that your discussions will assist theWorld Bank Group and the IMF to continue improving the quality oflife of people everywhere.

I wish you all a very pleasant stay in Dubai, and hope that you willfind some time outside of your busy schedules to enjoy our beautifulcountry and experience our warm hospitality.

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OPENING ADDRESS BY KASPAR VILLIGERTHE CHAIRMAN OF THE BOARDS OF GOVERNORS

AND GOVERNOR OF THE BANK AND THE FUNDFOR SWITZERLAND

President Wolfensohn, Managing Director Köhler, my fellow Gov-ernors, Excellencies, ladies, and gentlemen, I am honored, on behalf ofSwitzerland, to chair these 2003 Annual Meetings of the World BankGroup and the International Monetary Fund, which are being held forthe first time in the Middle East. On behalf of the Boards of Governors,I would like to express our deep appreciation to the host government ofthe United Arab Emirates, and the authorities and people of the beau-tiful and modern city of Dubai for the excellent arrangements for ourmeetings and the warm hospitality extended to us all.

Our meetings here in Dubai come at an opportune time for themembership. Despite recent events and tensions in some parts of theregion, many countries have undertaken difficult economic reforms tostrengthen and liberalize their economies. These efforts have been suc-cessful in achieving macroeconomic stability and greater integrationinto the world economy for the betterment of their peoples.

Fellow Governors, as we are meeting at a time of continuing eco-nomic uncertainty, we all must continue to work together to send astrong signal to governments, markets, and our populations of ourresolve to promote peace and prosperity throughout the world. In thisregard, it is crucial that we reaffirm our belief that the United Nationsand the Bretton Woods Institutions continue to have a vital role to playin their respective areas of expertise in contributing to these objectives,sometimes under very difficult and dangerous circumstances, as wehave seen recently.

I would like to begin these meetings by remembering Dr. AlyaSousa, who, while working for the World Bank in Iraq, tragically losther life along with many others as a result of the terrorist attack on theUN Headquarters in Baghdad on August 19, 2003.

There is no question that international crime and terrorism shouldbe fought with all the means at our disposal. But it is important that wedo not lose sight that we also need to make equally strong if notstronger efforts to fight poverty, enforce human rights, and resolve con-flicts peacefully according to international law. Success in these areaswill help to ensure that terrorism finds no breeding ground.

Fellow Governors, it is not by accident that the Bretton Woods Insti-tutions have chosen to hold their Annual Meetings this year in theUnited Arab Emirates. The remarkable story of the United Arab Emiratesis a shining example of how the pursuit of sound economic policies and

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wide-ranging structural reforms can boost economic growth and lead tohigher standards of living. Our gathering in Dubai demonstrates that thereis a strong dialogue between this region and the rest of the world. We aresending a clear signal that we have common values, that we respect oneanother, and that we desire to live together peacefully. It is in this spiritthat we meet in Dubai to discuss the current economic issues of the day.

Fellow Governors, the global economy continues to face uncer-tainty, stemming from the aftereffects of the bursting of the equity pricebubble, the investment overhang, and continuing geopolitical insecuri-ties. However, a recovery now appears to be underway, and the balanceof risks has improved significantly. The U.S. economy is performing rel-atively well. There are encouraging signs from Japan, and several Euro-pean countries have started to implement some long-delayed reforms.It is now the duty of all policymakers around the world to try to turnthese early signs of an economic rebound into a truly sustainable recov-ery. In this regard, macroeconomic policy in the major currency areaswill have to continue to be supportive, and structural reform efforts willhave to be strengthened in order to reduce vulnerabilities over themedium-term. Looking forward, the question is whether the U.S. econ-omy will be able to continue as the sole engine driving global economicgrowth, especially as many take the view that the rising current accountand fiscal deficits in the United States could threaten its medium-termoutlook, as well as exacerbate global imbalances.

In light of these circumstances, I can only regret that Europe cannotfully play its role in supporting the global recovery. In my view, the weakEuropean performance would best be addressed by pushing forward thereform agendas. Some initial progress has been made, but it needs to befollowed up forcefully. One of the most important priorities is the needto address the challenges that aging populations throughout Europe willpose to longer-term fiscal positions, labor supply, and economic growth.

In the emerging markets, the recovery has largely remained solid,despite a variety of shocks. To some extent, this can be attributed to thehigher risk-taking by international investors, given the low-yield environ-ment in developed countries. Efforts by many of these countries toimprove their domestic fundamentals have certainly also played animportant role. Many challenges remain in the areas of fiscal consolida-tion, public debt sustainability, and banking sector reform. Now, in animproved economic environment, is the time to implement these reforms.

Growth in low-income countries has remained relatively robust,but there are wide differences among countries. The weak economicperformance in sub-Saharan Africa remains particularly worrisome, asit stands in stark contrast to what would be needed to reach the targetsset under the Millennium Development Goals (MDGs), in particularthe halving of poverty by 2015.

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There are positive developments as well, including NEPAD and thejoint initiative for seven low-income countries in the Commonwealth ofIndependent States, called the CIS-7 Initiative. Important first stepshave been taken, but it is clear that the ultimate success of these initia-tives lies with the countries themselves.

Fellow Governors, over the last several years the IMF’s lending hasbecome increasingly concentrated on a few emerging market membersthat received exceptional access to Fund resources. It now unfortu-nately appears that these Fund-supported programs will most likely beprolonged and extend over a number of years. This could reduce theavailability of Fund financial assistance to other countries.

This development has raised two important issues for us to consider.First, to ensure that the Fund is able to respond quickly in crisis situa-tions, it should adhere strictly and consistently to its policy rules onexceptional access. Second, to improve the Fund’s crisis prevention andresolution frameworks further, it should continue to strengthen surveil-lance, improve debt sustainability analysis, and increase transparency.We also need a better framework to deal with financial crises, especiallywhen they involve unsustainable sovereign debt. In this regard, I wel-come the IMF’s efforts to strengthen surveillance by taking a fresh per-spective on the policy frameworks of program countries, incorporatinginternational standards and codes into surveillance, and undertakinganalysis based on the balance sheet approach.

Fellow Governors, strong global economic growth is an importantcondition for making progress toward meeting the commitments thatwe made under the Millennium Declaration. But growth is not enough.I would like to share with you some thoughts on the formidable chal-lenges ahead of us. The Millennium Development Goals describe avision of a better world for all. They also provide quantifiable targetsfor the global community to measure progress toward the importantfight against poverty.

Last year in Monterrey, we launched a partnership to achieve thesetargets. We agreed that successful poverty reduction depends on theactive collaboration of three main partners: the governments and civilsocieties in low-income countries, the public and private sectors in donornations, and the multilateral institutions. It requires sound national poli-cies and good governance in developing countries, increased and moreeffective assistance from donors, as well as the support of the interna-tional financial institutions in putting in place strong policies, and build-ing capacity through policy surveillance and technical assistance.

I am pleased to see that a number of low-income countries havealready started to reap the first fruits from implementing good policiesin a sustained manner. The strongest performers in Africa have seenreal growth rates of above 5 percent over the past five years, although

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growth in sub-Saharan Africa as a whole remains at about 1 percent.Important progress has also been achieved under the HIPC Initiative,where 27 countries have reached the decision point and 8 of them havesucceeded in reaching the completion point. Their adherence to strongpolicies has allowed these countries to receive considerable debt relief.This has freed critical resources for social spending.

Fellow Governors, the sad fact remains that this substantial progressby the best-performing countries is not sufficient even for them to halvepoverty by 2015. What else is necessary? It is my firm belief that growthcan be increased by enhancing the role of the private sector throughencouraging local and foreign private investment in these countries.Attracting such investment will not only require macroeconomic stabil-ity, but also the carrying out of critical structural reforms. This must becomplemented by policies to improve governance, build and strengtheninstitutions, as well as create a legal and regulatory environment con-ducive to private sector activity. All of these steps can help create what Iwould call a culture of credibility. While encouraging progress in thisregard is evident in some countries, many other countries have experi-enced difficulties in fostering private sector activity. The Bank and theFund can contribute in this area, in collaboration with other developmentpartners, by providing low-income countries with advice and technicalassistance to help them develop a vibrant and flourishing private sector.

Fellow Governors, the Millennium Development Goals are theframework for the World Bank’s activities, in partnership with otherinternational institutions. The Bank, together with other donors, hasalso recognized the need to engage much more actively in low-incomecountries through improved analytical work, capacity-building, and theidentification of innovative project mechanisms to improve governanceand deliver basic social services.

Sound domestic policies in low-income countries are an importantprecondition to meet the goals of the Millennium Declaration. But theyare not enough. They need to be matched by greater financial assistancefrom the international community. We reached a consensus at Monter-rey on the need to increase substantially the quantity and effectivenessof official development assistance (ODA) if developing countries are tobe able to achieve the Millennium Development Goals. However, thedonor countries might not be able to generate sufficient additionalODA. We might therefore have to look for other, more innovative waysto provide the resources that are needed, as envisaged in the MonterreyConsensus.

Fellow Governors, sustainable poverty reduction requires morethan development assistance. Further trade liberalization can make animportant contribution in this regard. It cannot only raise growth in

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both developed and developing countries, but also offer developingcountries a real chance to trade their way out of poverty. A successfulconclusion of the Doha Trade Round is, therefore, of utmost impor-tance if developing countries are to be integrated better into the multi-lateral trading system and the global economy.

The inability to reach agreement last week in Cancun is a setback forall, developed and developing countries alike. It is even more disap-pointing, as success at Cancun could have helped to strengthen theglobal economic recovery. Nevertheless, I am very hopeful that this isonly a temporary stumbling block, and will not prevent World TradeOrganization (WTO) members from eventually reaching a timely con-clusion to the Doha Round. Greater trade liberalization through a mul-tilateral process will increase prosperity in all nations, and help toachieve the Millennium Development Goals. If the Doha Round is tosucceed, all countries must be prepared to be flexible and realistic ifthey wish to put the Round back on track. However, even a successfulconclusion of the Doha “development round” will not allow low-income countries to benefit immediately from these new trading oppor-tunities. Their ability to engage more actively in the global tradingsystem can be enhanced through support for reform and technical assis-tance. I am happy to see that the Bretton Woods Institutions are activein this area. Fellow Governors, let me return to the Monterrey Consen-sus document and its call for enhancing the voice and participation of alldeveloping and transition countries in decision-making in the BrettonWoods Institutions. We all have a role to play in this endeavor: theshareholders, the Bretton Woods Institutions, and the developing andtransition countries themselves. Let me first call your attention to theprogress made in stimulating participation at the country level. Manyprograms in developing and transition countries are now based onPoverty Reduction Strategies. They are drawn up by country authori-ties, who rely on input from civil society. These Poverty ReductionStrategies have developed into a powerful instrument to ensure owner-ship of a country’s reform program. The Bank and the Fund play a valu-able role in supporting countries’ capacity to address poverty withtechnical assistance and financial support.

Nonetheless, while it is important for developing countries to partic-ipate in shaping their own economic programs, it is equally importantfor them to feel well represented in the Bretton Woods Institutions, andto participate in their decision-making. We have already made someprogress in strengthening the capacity of the offices of those ExecutiveDirectors that represent a large number of developing and transitioncountries. As for measures to directly affect representation, I believethat an increase in the number of basic votes should be considered, as it

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would strengthen the relative voting power of countries with smallerquotas.

Fellow Governors, in the World Bank and the IMF, Switzerlandchairs a so-called mixed constituency of countries from Eastern Europe,the Balkan Region, and some countries of the former Soviet Union.Some of these countries are quite advanced in the process of transition.Indeed, one of them, Poland, will be joining the European Union verysoon. However, many other countries, for instance in Central Asia, facemore formidable challenges.

I believe that mixed constituencies representing both debtor andcreditor countries have a great potential to help raise the voice ofdebtor countries. The intense debates between partners within the samevoting group allow all of us to better understand the various sides of anissue. Mixed constituency chairs are also able to act as effective bridgebuilders when the entire membership is wrestling with a delicate issue.

Fellow Governors, the prospects of the world economy have clearlyimproved since we last met in Washington. But we still face serious eco-nomic issues that require tough decisions and forceful action. Nonethe-less, I am confident, that by vigorously implementing our respectivecommitments to one another, we will succeed in meeting the enormouschallenges that are before us, and thereby provide a better world forfuture generations. The multilateral problems of today require multilat-eral solutions. No nation should feel excluded from the discussion.Given their universal membership and cooperative nature, our twoinstitutions remain the relevant organizations for us to tackle thesechallenges together.

Fellow Governors, I hereby declare open the 2003 Annual Meetingsof the World Bank Group and the International Monetary Fund.

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OPENING ADDRESS BY JAMES D. WOLFENSOHNTHE PRESIDENT OF THE WORLD BANK GROUP

It gives me great pleasure to welcome you to this remarkable city ofDubai for the Annual Meetings of the World Bank and the Interna-tional Monetary Fund (IMF).

I would like to express my profound appreciation to the governmentand people of the United Arab Emirates for their warm hospitality,their magnificent preparations, and their commitment to making ourmeetings a success.

Thank you, Chairman Kaspar Villiger, for your remarks and for yourleadership of these meetings.

I wish also to thank my friend, Horst Köhler, and our colleagues inthe IMF for another year of working together in close and effectivepartnership.

The Region and the World

We meet in the Middle East for the first time, and at a vital moment.The eyes of the world are on the region. They are also on us.

We meet, 184 nations strong, with a responsibility to show leader-ship, and set a clear course for development and peace.

We meet in the shadow of conflict and loss.The horror of the attack on the United Nations compound in Baghdad

is seared in memory, and we were reminded of it by yesterday’s attack.We mourn Sergio de Mello, an exceptional humanitarian who dedicatedhis life to development, and with whom we worked closely in manypost-conflict countries.

We mourn also Dr. Alya Sousa, our Bank colleague whom we lost toterrorism. She was a committed professional who took pains to lookafter her co-workers. An outstanding person.

I visited with both just days before the attack. Like all of you, I feelfor the families of those killed, and injured, in the blast. How sad ourworld when peacemakers become the targets.

We honor Sergio, Alya, and all who have died by continuing theirwork.

I can assure you of the Bank’s commitment to help the people ofIraq, just as we have worked to support the people of Afghanistan,Bosnia-Herzegovina, Kosovo, Timor-Leste, and the West Bank andGaza. One result of our effort is the needs assessment we and our IMFand UN colleagues will deliver to donors in Madrid next month. Welook forward to assisting with the reconstruction process in the yearsahead.

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The Bank has been at work in this region for more than half a cen-tury. Our first loan here was, in fact, to Iraq, in 1950, for flood control onthe Tigris and Euphrates.

The projects we support today finance low-income housing inJordan, micro-credit to women in Yemen, and capacity building for anew nation state in West Bank and Gaza. We also support cooperationby 10 Nile basin countries to provide water for 300 million people today,and 600 million just a quarter century from now. We provide reim-bursable technical assistance to Saudi Arabia.

Knowledge and the exchange of ideas are key to our collaboration.That is why we have prepared, together with scholars and experts in theregion, new reports on employment, trade, gender, and governance.That is why our Web site and its wealth of development experience areavailable in Arabic.

This is an ancient region that has given civilization so much, in science,mathematics, culture, and religion. And yet, it is also a young regionwhere an astonishing 60 percent of its people are under the age of 25.

I would like to offer my remarks today particularly to the youngpeople of the Middle East, and of the world.

Last week, in Paris, I met with youth leaders who represented organ-izations with more than 120 million members worldwide. The meetingalso included rural youth and street kids, children orphaned by AIDSand civil conflict, youth from the excluded Roma community, andyoung people with disabilities.

They met in peace and with mutual respect. They asked why ourgeneration could not do the same.

They said: we are ready to be part of the solution, to be partners. But,they also said, we do not want a future based only on economic consid-erations, there must be something more. They challenged us aboutvalues and beliefs.

My colleagues and I were inspired by their passion and idealism. Weinvited four representatives to join us here today to witness our sharedcommitment.

Soon, young people will start working in the Bank’s country offices,to help review projects and suggest initiatives, as is already the case inJapan and Peru. We will also ask governments to make it possible foryouth to participate in discussions of poverty reduction strategies. Andwe will come together in 12 months time to take stock of how far wehave been able to come in our partnership.

By the year 2015, there will be 3 billion people under the age of 25.They are the future. But, as the young people in Paris said most forcibly,they are also the now.

And their expectations of us are high.

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To respond to them, we must address the fundamental forces shapingour world. In many respects, they are forces that have caused imbalance.

In our world of six billion people, one billion own 80 percent ofglobal gross domestic product (GDP), while another billion struggle tosurvive on less than a dollar a day. This is a world out of balance.

Over the next 25 years, 50 million people will be added to the popu-lation of the rich countries. About one and a half billion people will beadded to the poor countries. Many will experience poverty and unem-ployment, as well as disillusion with what they will see as an inequitableglobal system. A growing number will leave their home countries tofind work. Migration will become a critical issue.

There is further imbalance between what rich countries spend ondevelopment assistance, $56 billion a year, and what they spend on agri-cultural subsidies, $300 billion, and defense, $600 billion. The poorcountries themselves spend $200 billion on defense, more than whatthey spend on education. Another major imbalance.

Developing countries are projected to grow at twice the rate of devel-oped countries. But many will need help to bridge the gap between richand poor. Pressures on environment and natural resources, like water,will become central issues. Interdependence will be more evident.Opportunities will expand, but so will dangers.

Three years ago, world leaders gathered at the Millennium Summitto assess the future. They committed to cut poverty in half by 2015.They agreed on Millennium Development Goals, for health, education,and equal opportunity for women. They set targets for the environment,from the air we breathe to the preservation of our forests and oceans.These are remarkable goals. Many leaders spoke of them as beingmorally right. Our human responsibility, but also in the global interest.

They agreed on a bargain, one that was spelled out in meetings inMonterrey and Johannesburg.

• Developing countries promised to strengthen governance, create apositive investment climate, build transparent legal and financial sys-tems, and fight corruption.

• Developed countries agreed to support these efforts by enhancingcapacity building, increasing aid, and opening their markets for trade.

There was unprecedented consensus on the bargain and the actionsrequired to achieve it. What are the results?

The developing countries’ policies and governance have never beenstronger. As I mentioned, the developing countries are growing signifi-cantly faster than rich countries. But this good news about strengthenedgovernance should not blind us to other important realities. Progress onpoverty differs sharply among regions.

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China, with 1.3 billion people, will achieve most of the MillenniumDevelopment Goals. India, with a billion people, is on track to meet thepoverty goal.

But in many other countries, the Millennium Development Goalswill not be met.

Sub-Saharan Africa, with 600 million people, will fare the worst. Thenumber of people living in absolute poverty will increase, not decrease.Only half of Africa’s children will complete primary school; one in sixwill die before they reach the age of five, many from AIDS.

Like the young people I met in Paris, I ask: why?Part of the reason is that reform is not happening fast enough in the

developing nations. There is still too much cronyism and corruption. Innearly every country, it is a matter of common knowledge where theproblems are and who is responsible. Frankly, there is not enough boldand consistent action against corruption, particularly at the higherlevels of influence.

What about the developed countries’ part in the global bargain?Here too, there has been progress:

• Commitments made in Monterrey to an increase in aid of around $16billion a year by 2006;

• Substantial pledges to fight HIV/AIDS and malaria, and for conflictprevention and reconstruction; and

• Better allocation and use of resources, including enhanced donor har-monization, as in the Rome Agreement earlier this year.

But these actions, while laudable, do not match the promises made.In Dakar, donors said no sound primary education project would go

unfunded. They committed to an “Education for All” initiative requir-ing several billion dollars of incremental grant funding for a 5 to 10 yearperiod. Yet, today, under the “fast track” program, only seven countrieshave received a promise of funding, only for a total of $200 million overthree years, and reaching less than 5 percent of the 115 million childrenwho are not in school.

This disparity between promise and action naturally leads develop-ing countries to be concerned about where the additional resources willcome from—to help them open schools, hire teachers, and plan for sec-ondary (as well as primary) education.

They worry that resources needed to meet other goals are not forth-coming. That debt relief is not sufficient. And that monies go to thelatest crisis or to fight drugs or terror—rather than to long-term devel-opment They worry that only half of existing aid flows actually reachthem in direct cash transfers for their programs. And they worry thatrepayments of debt are crippling their capacity to grow. Developingcountries feel they have made significant efforts to fulfill their part of

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the global bargain. But they do not see enough delivery on the otherside.

The recent impasse at Cancun is a case in point. Two-thirds of theworld’s poor people depend on agriculture for their livelihood. As thedeveloping countries see it, rich nations put forward proposals that didnot respond to their central demands in this crucial area. They alsofound unacceptable a view of negotiations in which they are expectedmerely to respond to rich countries’ proposals.

At Cancun, developing countries signaled their determination topush for a new equilibrium. They signaled that there must be greaterbalance between the rich and powerful, and the poor and numerous.They signaled that for there to be peace and sustainable develop-ment, there must be a different set of priorities. There must be greatercooperation.

The fact is that aid today is at its lowest level ever. It has fallen from0.5 percent of GDP in the early 1960s to about 0.22 percent today. Andthis at a time when incomes in developed countries have never beenhigher.

Against this background, the Bank has taken a close look at howprogress toward the Millennium Development Goals could be acceler-ated, through better policies, more effective use of aid, and higher aidlevels. Our analysis, based on current plans, finds that

• aid is being used more effectively today than ever before because ofimprovements in many developing countries and improvements inthe allocation of development

• developing nations could easily absorb double the extra $16 billionper year promised in Monterrey for 2006.

And this is a conservative estimate. The $50 billion in additional aidper year proposed by Chairman [of the International Monetary andFinancial Committee] Gordon Brown could be put to effective use veryquickly.

The prospect of such funding would encourage developing coun-tries to make more rapid reforms. Leaders are more likely to takeaction if they know that resources are forthcoming on a consistentbasis. They will not move if the financing and benefits of reform cannotbe ensured.

Action on trade is equally important. It is inconsistent to preach thebenefits of free trade and then maintain the highest subsidies and barri-ers for precisely those goods in which poor countries have a compara-tive advantage. Developing countries also need to help themselves onthis point, since they pay substantial tariffs in South-South trade.

Restoring balance to our world will not happen unless there are seri-ous efforts to build greater public understanding about the importance

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of poverty and inequity. My generation grew up thinking that therewere two worlds, the haves and the have-nots, and that they were, forthe most part, quite separate. That was wrong then, and is even morewrong now.

The wall that many people imagined to separate the rich countriesfrom the poor countries came down on September 11 two years ago.

We are linked in so many ways: not only by trade and finance, but bymigration, environment, disease, drugs, crime, conflict, and yes, terror-ism. We are linked, rich and poor alike, by a shared desire to leave abetter world to our children. And by the realization that if we fail in ourpart of the planet, the rest becomes vulnerable. That is the true meaningof globalization.

We know elections are won and lost on local issues. But it is globalissues, and especially poverty, that will shape the world our children livein. Leaders must make the case for development. It is a domestic as wellas an international issue.

Learning about other countries and cultures, and respecting theirvalues and aspirations, is imperative. We need to teach our childrenabout the rest of the world. The young people I met in Paris live asglobal citizens. They have a grounding in their own cultures, but theyrespect others.

So do the young people of Dubai. Last Sunday, the Bank convened aconference at the Women’s College here. We connected by videoconfer-ence to young women students in Afghanistan, Ethiopia, Jordan,Turkey, Uganda, the United States, and Yemen. We asked them whichissues they would like to discuss. They said education of girls, respectfor different cultures and religions, stereotypes, dreams, gender equity,ethics, art, and unity through diversity.

This was the view of young women students right here. They areglobal citizens. And Dubai can be very proud of them, as I am.

We can feel encouraged that a global poll conducted earlier this yearindicated that many people around the world see the connectionbetween poverty and stability. In some cases, they see it more clearlythan their leaders.

I have suggested how nations can rise to their responsibilities. So toomust development institutions rise to theirs.

Together, working with governments, civil society, and the privatesector, we have supported the developing countries in their achieve-ments over the last 40 years: increasing life expectancy by 20 years andreducing illiteracy by half. But now, with just 12 short years left to reachthe Millennium Development Goals, multilateral and bilateral organi-zations must raise their game. That means moving away from singleprojects we call them “feel good” projects, and going for results on scalein 50 or 500 villages, or 5000.

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Speaking for the Bank Group, we are taking a hard look at how wecan do better, how successful programs can be scaled up.

We now have more than 2,500 staff in the field, to be closer to ourclients. We are speeding up project preparation time. Success rates in theprojects we support have risen, from 71 percent in 1995 to 85 percentlast year. Policy performance and good governance are now priorities inour country dialogues.

We are driving hard on AIDS, education, and water, and expandingour efforts in basic infrastructure. Working with the IMF and our HIPCInitiative [Initiative for Heavily Indebted Poor Countries] partners, weare providing some $52 billion in debt relief to 27 low-income countries.And we continue to respond to the needs of middle-income countries,where many of the world’s poor people live.

We are leveraging technology, with more than 100 of our offices con-nected through satellite. We do 1,500 video conferences every monthand reach more than 60 countries every day. The Development Gate-way has about 100 partners helping to build capacity and provide aninformation base for the development community.

We are introducing a new “client card” that gives policymakers andteam leaders the same Web-based information we use to manage proj-ects, provide financial information, and research on a confidential basis.It is a powerful tool for implementation and, above all, transparency.Our other members of the Bank Group family also are making progress:

• The International Finance Corporation is encouraging private sectorinvestment in small and medium-size enterprises, including Africa,and introducing new approaches like carbon emissions trading.

• The Multilateral Investment Guarantee Agency has continued toincrease its focus on low-income countries, last year over half of itsguarantees were in IDA-eligible nations [nations eligible for areplenishment from the International Development Association].

In the poll I mentioned earlier, people said they see the Bank asincreasingly client-oriented, effective, and relevant. But they warned usto continue our efforts to be less bureaucratic, more flexible, anddeliver more results. We take this feedback seriously.

Next spring, we will be cosponsoring, together with the Chinese gov-ernment, a conference in Shanghai on how to enhance poverty reduc-tion efforts. How to take successful programs and scale them up, how toenable poor people to be the central force for change and not an objectof charity, how to manage programs over time for results that trulymake a difference. I hope many of you will join us in Shanghai.

Taking our efforts to the next level is the challenge for the interna-tional community. It is the challenge for the Bank, and our world-classteam is determined to do it.

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A Time for Action

It is time to take a cold, hard look at the future. Our planet is notbalanced. Too few control too much, and too many have too little tohope for. Too much turmoil, too many wars. Too much suffering.

The demographics of the future speak to a growing imbalance ofpeople, resources, and the environment. If we act together now, we canchange the world for the better. If we do not, we shall leave greater andmore intractable problems for our children.

We must rebalance our world to give everyone the chance for a lifethat is secure, with a right to expression. Equal rights for women. Rightsfor the disabled and disadvantaged. The right to a clean environment.The right to learn. The right to development.

These are not exotic objectives. All of us, rich and poor alike, wantthe same thing. There is no better time than now to join in a commoneffort to make a better world.

You are the global leaders to make it happen. Delay is reckless. Thisis a time for courage and action for a new vision of the future.

I do not speak as a dreamer or a philosopher. Like all of you, I toohave a family and worry about its future. We have the resources tomake a difference. We know how to make a difference. We have thecourage to make a difference. We must now act to make a difference.

We all share one planet. It is time to restore balance to the way weuse it. Let us move forward to fight poverty, to establish equity, and toensure peace for the next generation.

Let us respond to the youth from Paris and the students in Dubaithat they can trust us and that we will act today, here, in Dubai.

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REPORT BY TREVOR MANUELCHAIRMAN OF THE DEVELOPMENT COMMITTEE

As Chairman of the Development Committee, I am pleased toreport to you on the Committee’s work during the two meetings held in2003. The central focus of our meetings has been on implementing thestrategies, partnerships and actions agreed in Monterrey and Johannes-burg to achieve the Millennium Development Goals. The partnershipset out in Monterrey identified clearly the need for strengthened effortsby both developed and developing countries, as well as internationalinstitutions. For developing countries, three areas in particular wereemphasized: improving the environment for investment and privatesector activity, strengthening governance, including public financialmanagement and increasing human capital through broader and moreeffective delivery of basic services to the poor. For developed countries,increased market access, debt relief and increases in the volume, pre-dictability and effectiveness of aid were highlighted.

We have asked the Bank and the Fund, working closely with institu-tional partners, to provide us yearly with a global monitoring report toallow the Committee to regularly assess progress and to reinforce account-abilities among developing and developed countries, as well as the inter-national agencies, for the policies and actions necessary for achieving theMDGs. As part of this process, we urged the Bank to continue to improvethe Country Policy and Institutional Assessment (CPIA) methodologyand the transparency of its application and to help facilitate statisticalcapacity building, especially for those countries most at risk of not meetingthe MDGs. We will receive the first full report at our next meeting.

The centrality of the Poverty Reduction Strategy approach in defin-ing country strategies and providing a country context in which donorsand international agencies can align support has been emphasizedthroughout our discussions. At our last meeting, we reviewed progressin the implementation of this approach. We welcomed the increasingopenness of policy dialogue with all stakeholders, the improved focuson sources of growth and the investment climate and the policiesneeded to reduce poverty, greater realism and better prioritization,increased pro-poor public spending as well as efforts to strengthenpublic expenditure management. At the same time, we recognized thatPRSPs are charged with multiple and sometimes competing objectives.The challenge now is to achieve successful implementation, includingthrough much more effective donor alignment and harmonizationaround national strategies. In particular, we issued a strong call for swiftprogress in implementing the results agenda and the agreements in theRome Declaration on Harmonization.

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We have stressed that, as part of the Monterrey partnership, soundpolicies by developing countries must be supported by adequate andappropriate financing. Ensuring this and enhancing aid absorptivecapacity through policy and institutional reforms is critical to the virtu-ous cycle of actions needed to meet the MDGs. We urged all countries,without delay, to take specific steps to meet their commitments to pro-vide additional aid resources by 2006. We have also asked the Bank,working with the Fund, to examine various policy options to mobilizethe substantial additional resources that are needed to scale up progresstowards the MDGs, and to report to us at our Spring Meeting.

Trade remains of crucial importance to growth and poverty reduc-tion. The ambitious targets set for the Doha Development Agenda area necessary precondition for our strategy to meet the MDGs. Devel-oped countries must do more to liberalize their markets and eliminatetrade-distorting subsidies, including in the areas of agriculture, textilesand clothing. It is in this context that we particularly regretted the dis-appointing outcome of Cancun and we urged all participants to put theprocess back on track as soon as possible. We welcomed the Bank andFund’s pledge to support countries to benefit fully from a more liberal-ized trading system and urged the Bank to continue to tailor its lendingactivities to support country-owned trade initiatives.

The committee has reviewed progress under the HIPC Initiative andreconfirmed its commitment to its implementation and full financing.The achievement of long-term debt sustainability will require actions onthe part of HIPC countries as well as development partners. We haverequested further work on providing additional relief, where appropriate,at the completion point. Some HIPCs face a continued challenge to reachthe decision point and we have encouraged further staff efforts to assistthese countries. We expect to review a Bank/Fund report on a forward-looking framework for debt sustainability in low income countries atour next meeting, and we have also encouraged further staff work onways to help reduce the vulnerability of these countries to exogenousshocks.

Infrastructure makes an important contribution to economic growthand reaching the MDGs by improving the investment climate and sup-porting the development requirements of low and middle income coun-tries. We therefore have welcomed the Bank report on the infrastructureaction plan, as well as the follow-up to the recommendations of theWorld Panel on Financing Water Infrastructure and we have asked theBank Group to work with member countries to secure its early imple-mentation and we will return to this issue at a future meeting.

Finally, as called for at Monterrey, we have continued our discussionof innovative and pragmatic ways to enhance the voice and effectiveparticipation of developing and transition countries in the work and

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decision making of the Bank and the Fund. There is no single approachto accomplish this, but rather action is required over time across a rangeof issues. Strengthening the responsiveness of the Bretton Woods Insti-tutions to country-owned strategies and priorities through the PRSapproach, complemented by on-going efforts to promote greater open-ness and transparency, decentralization and staff diversity all contributeto this objective.

Our Executive Directors have made some progress on measures toenhance capacity in developing and transition EDs’ offices and in capi-tals. We welcome this work and urge its completion by next spring. Wehave urged developing countries to take up their full subscription toIDA and noted that the IDA-13 Mid Term Review and IDA-14 providea timely opportunity to enhance borrower participation in the IDAreplenishment process and its Board’s decision-making.

As to the most challenging issues of voting structure and composi-tion of the Boards, it is recognized that these will require time and effortto arrive at the necessary political consensus. We are committed to con-tinue our efforts on these matters. For our consideration at the SpringMeeting, we have asked for a framework specifying the precise issues con-cerned, a schedule, and a set of procedures which will provide the basis forour discussions at future meetings of the Development Committee.

On a final point, at both meetings we have, of course, noted thesignificant challenges posed by the present situation in Iraq. Wehave called on the Bank and the Fund to play their normal role in Iraq’sredevelopment.

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STATEMENTS BY GOVERNORS AND ALTERNATE GOVERNORS

AFGHANISTAN: ANWAR UL-HAQ AHADYGovernor of the Bank

It is always a great honor to address the Annual Meetings of theWorld Bank Group and the International Monetary Fund. Last year, Istated before this forum that news from the Islamic State ofAfghanistan was good. I am pleased to once again bring you good newsfrom Afghanistan.

In the past year, socioeconomic and political developments inAfghanistan have been in accordance with the Bonn Agreement, whichestablishes the framework for a post-conflict polity in Afghanistan. Let mefirst briefly comment on the sociopolitical situation. In the past few months,our major political development has been the drafting of a new constitu-tion. As we all know, a constitution is a collection of major values of a polityand the prescribed institutions for the realization of those values.

Once again I am happy to report that the process of drafting of theconstitution has been marked with openness and genuine discussions.The values included in the draft constitution are those of Islam, democ-racy, individual freedom, pluralism, equality of all citizens before thelaw, good governance, gender equality, and national integration andopen economy. The ratification of this draft constitution by the LoyaJirga (Ground Council) is expected in December 2003. With adoptionof this new constitution, the people of Afghanistan will be formally sub-scribing to the universal values of human rights, women’s rights, bill ofrights, democracy, tolerance, and pluralism. Indeed, I can assure youthat soon the people of Afghanistan will benefit from one of the moreprogressive constitutions in the region.

Even though I can talk about other positive sociopolitical develop-ments in my country, I would rather report on good economic news.Last year, when I stood before this forum, multiple currencies were incirculation in Afghanistan, and the economy was suffering from a veryhigh inflation rate, a rapidly depreciating exchange rate for the nationalcurrency, and a nonfunctioning banking system.

I am delighted to report that we have made great progress in eco-nomic matters. Last October, we launched a very successful currency con-version program, which took us three months to complete. Now we havea single currency that is accepted throughout the country. Our currencyconversion program enabled the central bank to establish a monopolyover the printing of banknotes and, consequently, control over the money

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supply. As a result of our monetary policy, in the past nine months, onaverage, we have had no inflation, and the exchange rate for our nationalcurrency has been stable. Such financial stability is particularly remark-able in a post-conflict economy with considerably large amounts of bothforeign and domestic new expenditures. Similarly, in the past year, theAfghan economy had a remarkably high rate of 30 percent growth and isexpected to grow by another 20 percent next year. The government hasadhered to strict fiscal discipline and has committed no overdrafts. Fur-thermore, the fiscal authorities have successfully reformed the country’srevenue collection system; consequently, domestic revenues in 2003 havealmost doubled. Thus, in terms of economic management and outcome,the past year has been a very good year for Afghanistan.

We have also made significant progress in the area of building eco-nomic institutions based on widely accepted international principles.Just last week, President Karzai signed a new central bank law and thebanking law. The central bank law allows Da Afghanistan Bank to beautonomous from the government. This is a milestone in the develop-ment of our monetary institution. Similarly, the new banking law callsfor the establishment of a liberal banking system, which allows foreignbanks to open their offices in Afghanistan, and encourages competitionamong commercial banks. Indeed, we have already licensed two foreignbanks to open branches in Kabul and a new microfinance bank that isregistered in Afghanistan but is owned by foreign investors.

I can mention other very positive economic developments, but suf-fice it to say that the Karzai administration has been very busy and suc-cessful in laying the foundation for a democratic and pluralistic polityand an open economy. We started this journey with the help of the inter-national community, especially the Bretton Woods organizations. Webelieve that we have achieved considerable progress; however, it will bevery difficult to complete this journey without continued significantsupport from the international community.

Thus, on behalf of my government, I appeal to your continuous ade-quate support in the next few years so that our political, social, and eco-nomic institutions can gain strength, and, like so many other nations,the people of Afghanistan can enjoy the benefits of freedom and pros-perity in a democratic-pluralistic society with an open economy.

AUSTRALIA: PETER COSTELLOGovernor of the Bank and the Fund

On behalf of Australia, I would like to take this opportunity to thankthe government of the United Arab Emirates and the people of Dubaifor their gracious hospitality in hosting these meetings.

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The past 12 months have been challenging for the international com-munity. A number of downside risks have receded, and there are somepromising signs that global growth may be strengthening. However, oureconomies still face many challenges, and a number of downside riskscontinue to weigh on the outlook.

Restoring confidence in the world economy will require continuedefforts by member countries to ensure a sustained recovery in growth.Of significant concern is the world’s continued over reliance on the U.S.economy as the major source of growth, with European growth remain-ing weak and on-going Japanese growth uncertain.

The sustainability of a number of large global macroeconomicimbalances are a concern. The fiscal positions of most advanced indus-trial economies have deteriorated, with all G-7 countries except Canadarunning large fiscal deficits. In the case of the United States, the deteri-oration of the fiscal position has put pressure on the current accountdeficit, creating the possibility of a rapid and disorderly adjustmentwhen it unwinds.

Aging populations will soon, and in some cases are already begin-ning to, affect the economic performance of a number of industrializedeconomies, placing further pressure on existing fiscal positions. There isan urgent need now for many countries to adopt credible fiscal frame-works that embed today’s necessary fiscal stimulus in a medium-termprogram of fiscal consolidation.

The Australian economy has remained resilient over the past yeardespite a weak world economy and the most extensive drought in Aus-tralian meteorological records. Key factors behind this robust economicperformance have been sound macroeconomic management based onthe government’s medium-term fiscal and monetary policy frameworks,combined with a sustained commitment to structural reform. Accord-ingly, the IMF described the Australian economy “. . . as one of thestrongest economies of the developed world. . . .” Looking forward,the Australian economy is expected to grow solidly in 2003/04, albeit ata little below trend, underpinned by a gradual recovery in global eco-nomic conditions and recovery from the drought.

Australia is not complacent, however, and recognizes that it is notimmune to the challenges faced by other economies. We will continue topursue sound long-term economic policies to avoid fiscal pressures andmaintain living standards in the context of an aging population. We aretherefore actively pursuing policies to increase labor force participationand raise productivity—importantly, this includes a continuing commit-ment to vigorous action at reducing barriers to trade and investment.

The progress of the Doha round of trade negotiations is very dis-appointing given the obvious potential benefits of trade liberalizationto the international community. We have all lost by the failure in

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Cancun, but particularly those in developing countries. As part of theMonterrey Consensus, developed countries agreed to deliver lowertrade barriers—the deadlock at Cancun highlights how far we are weare from making tangible progress on this front.

Agricultural support and protection from OECD countries, whichtotaled over US$300 billion last year, represents a crippling tax on theagricultural exports of developing countries. To put it into further per-spective, agricultural subsidies are worth over five times annual aid flowsto developing countries. Aid will not compensate developing countriesfor the denial of economic opportunities caused by trade restrictions.

The key developed countries must now exercise leadership to bringthe Round back to life. They, and other WTO participants, must putaside their individual differences in favor of the overall benefits of mul-tilateral trade liberalization, as demonstrated by the experience of theGATT. As finance ministers, we have a critical role to play in pushingfor comprehensive trade liberalization. In that regard, Australia wel-comes the vocal support of the IMF and World Bank in promoting suc-cessful outcomes for the Doha round, including through packaging theirsupport to assist countries in implementing commitments made as partof the Doha round.

This year’s IMF/World Bank Annual Meetings serve as a timelyreminder of the importance of international efforts to ensure peace, sta-bility, and economic prosperity in the Middle East. Since we met lastyear, we all face a new challenge in seeking to aid the Iraqi people tobuild an open, outward-oriented economy in a free and democraticIraq. The task is a formidable one. Australia has committed significanthumanitarian aid and has provided staff for the Coalition ProvisionalAuthority. The latter have made a substantial contribution workingwith free Iraqi colleagues in areas such as agriculture and the develop-ment of the 2004 Iraqi budget.

The IMF and the World Bank have a crucial role to play. Australianswere horrified by the bombing of the UN headquarters in Baghdad, andour sympathy goes out to those who were injured in the blast and to thefamilies of those who died. We have been heartened that despite thebombing, the international financial institutions and the UN family aremaintaining their commitment to Iraq. At the conference in Madridnext month, we hope the international donor community will demon-strate a strong resolve to help the Iraqi people meet the significant chal-lenges of reconstruction.

The Pacific region has faced a particular set of challenges over thepast year. Despite the best efforts of many, the Solomon Islands hasgradually slipped into disorder and lawlessness. The people of theSolomon Islands have been living in fear, and the economy has collapsed;a humanitarian crisis has been in the making. For those reasons, regional

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economies came together to respond to the request of the SolomonIslands government this year to provide help. Together with NewZealand, Fiji, Papua New Guinea, and other nations of the South Pacific,we have joined a multi-country regional assistance mission, concentratingon the areas of law and order and economic and budget stabilization.

The problems of the Solomon Islands cannot be remediedovernight. Long-term economic reform will be needed to create a viablefuture for the Solomon Islands. Australia has been pleased at the will-ingness of the international financial institutions to reengage and bringtheir expertise and financial resources to bear on these problems.

IMF

The legacy of the capital account crises of the last decade continuesto raise issues of how to best prevent economic crises, and manage thefallout when they occur. The IMF has responded to these challengesand has taken a number of steps to enhance the effectiveness of its sur-veillance activities. The ultimate test, however, of the Fund’s surveil-lance strategy is the impact of its advice on member countries. On thiskey criterion, further progress could be made.

In the case of developing and program countries, central to theFund’s effectiveness is its ability to act as a “confidential policy adviser.”This involves encouraging country ownership of program policies anddeveloping strong, candid working relationships between staff andcountry authorities to ensure advice reflects political realities. In thisregard, we welcome staff initiatives to bring a fresh perspective to thesurveillance of program countries.

But surveillance is not just about program and developing countries.At the present time, there is just as much riding on the quality of eco-nomic policies in the major economies as there is on the policies ofdeveloping economies. The IMF must therefore remain as vigilant inpromoting sound policies in the more advanced economies as it is indeveloping and emerging markets.

The challenge for the Fund in industrial countries is to ensure that itsadvice adds value among a number of competing sources of advice. Thekey to enhancing the effectiveness of IMF advice in these countries—indeed in all countries—is its ability to tailor its advice to addressing theindividual policy weaknesses of its members, bearing in mind thebroader implications for the stability of the international financialsystem.

While crisis prevention is the preferred means of promoting finan-cial stability, the international community must be in a position to dealeffectively with the possibility of new crises emerging. The IMF’s workon the SDRM provided valuable impetus for the wider use of collective

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action clauses and the development of ideas on a voluntary code of con-duct for debt restructuring.

The Fund’s new criteria for exceptional access provide anotherimportant element to improving the crisis resolution framework. Themeasures adopted by the Fund should help ensure appropriate financialassistance is provided within the context of a sustainable policy frame-work in the recipient country. For the new policy to work, it will beincumbent on the Board to build up a track record of applying the newaccess principles in practice—in doing so, it must resist short-term pres-sures to provide funding when policy settings are not consistent with asustainable economic position.

The recent improvements in growth rates in low-income countriesare a welcome development. But further improvements are needed toensure adequate progress towards poverty reduction and the Millen-nium Development Goals. While we all recognize the Fund has animportant role to play in these countries, its role needs to complementand not duplicate that of the World Bank, other multilateral develop-ment banks, bilateral donors, and the private sector.

Moreover, the Fund must ensure that it has the appropriate tools todeal with the challenges of low-income countries in their various stagesof development. The owners of the Fund need to ensure that what weask of the institution in low-income countries is within its capabilitiesand areas of comparative advantage. Strengthening the Fund’s surveil-lance capacity is a necessary condition in this regard.

These Annual Meetings provide an important forum for the ownersof the Fund to consider the future direction of the institution in thesechallenging times and provide sign-off on its agenda. For such a dia-logue to be meaningful, the Fund must represent all its membershipadequately. It is therefore crucial that future quota increases include arebalancing of quota shares to reflect the relative under representationof certain countries, particularly in the Asia region, relative to economicweight. It is also important that all countries have the capacity toexpress their voice in the debate. In this light, Australia supports recentinitiatives to increase the capacity of the largest member constituenciesat the IMF and World Bank to contribute more effectively to the opera-tion of the institutions.

World Bank

Australia welcomes the efforts by the World Bank in progressing theMonterrey Consensus and promoting the attainment of the MillenniumDevelopment Goals (MDGs). The international community has madeencouraging progress in identifying the preconditions for sustainabledevelopment.

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One thing that is striking from the Bank’s research is that a greatdeal of the recent reduction in global poverty has occurred in Asia,despite it receiving relatively low levels of official development assis-tance (ODA) per capita. This is consistent with the G-20’s work onglobalization, which has highlighted the importance of good policies,good governance, outward-looking approaches to trade and invest-ment, and market access in promoting development.

The World Bank can do more in stressing the fundamental role oftrade in promoting development, particularly by emphasizing enhancedtrade capacities in Poverty Reduction Strategy Paper (PRSP) andCountry Assistance Strategy work, and including appropriate tradefacilitation measures in Bank assistance. When used effectively, aid cansupport countries in developing sound policies and institutions to mobi-lize additional resources for development from a variety of sources,including domestic resources, international investment, and trade.

Accordingly, Australia strongly supports the argument that the bulkof aid dollars should flow to countries with good policies and gover-nance to maximize aid effectiveness. It is still apparent that aid flows donot sufficiently take into account recipient countries’ capacity to suc-cessfully absorb aid without undermining macroeconomic stabilityand/or fiscal and external debt sustainability. A number of Asian coun-tries have the policies and institutions in place to successfully absorbadditional aid, and yet current relative aid flows do not reflect theregion’s capacity to contribute to the achievement of the MDGs.

It is also clear that countries with poor policies and institutions rep-resent a significant challenge for the international community. Unlessthis challenge is addressed, these countries will not achieve their MDGtargets. It is critical that the international community remains engagedwith these countries and finds new ways to build local support andcapacity, so that over time additional assistance can be providedthrough traditional channels.

Australia has supported the Bank’s efforts in engaging with poorlyperforming countries in our region, and we look forward to continuingto work with the Bank on the Low Income Countries Under Stress(LICUS) initiative. We also note that, among LICUS countries, those inpost-conflict situations often have unique needs, and require a sus-tained commitment from the international community in order torebuild infrastructure and provide basic social services.

Australia remains a strong supporter of the Heavily Indebted PoorCountry (HIPC) Initiative, and we place considerable importance onefforts to ensure debt sustainability in developing countries. Debt reliefalone, however, is not sufficient to address poverty. Debt reduction isimportant, but needs to be accompanied by sustained improvements incountries’ growth potential. This again brings us back to the importance

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of good policies, good governance, increased access to world markets,and expanding export and investment opportunities.

The role of country policies and institutions and vulnerability toshocks in determining debt sustainability is also critical, and we wel-come the forthcoming IMF/World Bank review of debt sustainability inlow-income countries examining these issues. PRSPs also can play avital role in promoting good governance. However, despite recentprogress, weak institutional capacity continues to limit PRSP imple-mentation and poverty reduction efforts. To be effective, PRSPs mustbe integrated into policy formulation and budget planning processes.

Conclusion

The world economy continues to strengthen from some recent tur-bulent times, but challenges remain. It is important that countries con-tinue to implement necessary reforms to reduce their susceptibility toeconomic and financial shocks.

Moreover, we need to deliver on our commitment to the MDGs inorder to improve the welfare level of the most impoverished nationsand individuals. While aid has an important role to play in achieving the MDGs, it can only be a complement to sustained efforts to mobilizedomestic resources through better policies and governance. But thedeveloped economies have to match this commitment by providinggreater trade and investment opportunities for the developing world.

We continue to support the involvement of the Bretton Woods insti-tutions in this process. We look forward to the Bretton Woods institu-tions improving their sphere of influence and policy advice, equally withregard to both developing and developed economies.

The well being of our nations is dependent on the development ofsound domestic policies, meaningful trade liberalization, and good gov-ernance, which are fundamental if countries are to experience sustain-able economic growth and ongoing poverty reduction.

BELARUS: ANDREI KOBYAKOVGovernor of the Bank

I would like to join the previous speakers in thanking the govern-ment of the United Arab Emirates and the Dubai authorities, as well asthe management and staff of the World Bank and the InternationalMonetary Fund (IMF) for their cordial welcome and excellent organi-zation of the meeting.

Long-term experience of the International Monetary Fund and theWorld Bank confirms that these organizations are not only internationalcenters providing financial support to countries with transition economies,

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but also entities that strive to facilitate stability within an immense geopo-litical space. It is no accident that these meetings of the leading interna-tional financial institutions are being held in the region, stabilization of thesituation of which in many respects underlies global well-being.

The current paradigm of world development demonstrates thatstable, sustainable, and progressive development of countries, andsometimes the existence of nations, is impossible without mutual andcomprehensive consideration of interests of all the participants of theinternational relations. This is the reason that ensuring full-fledged inte-gration of the Republic of Belarus into the world economy has been ourmajor objective since the country gained its independence.

The Republic of Belarus, a new state that emerged in the very centerof the political map of Europe more than 10 years ago, has taken anadequate place in the world community as a stable, peaceful, and dem-ocratic state.

The economic situation in Belarus reveals that a certain macroeco-nomic stability has been achieved over recent years. If we look at thelevels and trends of per capita gross domestic product (GDP) and thepurchasing-power parity of the countries of the Commonwealth ofIndependent States (CIS), we see that Belarus, along with Russia, hasthe highest indicators. In the other CIS countries they are considerablylower. According to United Nations data, Belarus ranks higher thanthese countries on the Human Development Index. It has moved from68th to 53rd position in the last five years.

Long-standing positive GDP dynamics, the absence of considerableforeign debt, and export growth can also be considered our achievements.

A positive estimation of economic transformation in the Republic ofBelarus by the Executive Board of the IMF at the meeting on April 16,2003, is a confirmation that we are on the right track. Among positivedevelopments, the Executive Board noted accelerating de-nationalizationand privatization; stable GDP growth; reduced inflation; tightenedbudget, fiscal, and monetary policy; and exchange rate market and priceliberalization.

Belarus is welcoming such an approach and hopes it will become asolid basis to start negotiations on preparing a Stand-By Credit ProgramAgreement as well as expanding the range and amount of technical assis-tance provided by the IMF. We highly appreciate IMF technical assis-tance. Belarus is making efficient use of the funds provided by the IMF.

During the recent visit of the IMF mission to Belarus, our govern-ment once again confirmed its determination to cooperate with theFund. We are open and ready to discuss any forms and variants of thecooperation that are acceptable for Belarus.

In the framework of our cooperation with the World Bank, a SocialInfrastructure Retrofitting Project is being implemented.

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We are grateful to the World Bank for understanding the problemsassociated with abatement of the impact of the Chernobyl catastrophe.Our cooperation in preparing the Post-Chernobyl Recovery Project willcontribute to minimizing consequences of the catastrophe and solve arange of problems in the Chernobyl-affected areas.

We attach serious importance to consultative and analytical work inour cooperation with the World Bank. In this framework, reports onhealth system, environmental, and natural resource management to min-imize the impact of the Chernobyl catastrophe were prepared. Reportson private and social sector reform, public expenditures review and fiscaldiscipline, and poverty assessment are being finalized. The preparationof a New Country Economic Memorandum has been launched.

Belarus is determined to consistently develop its cooperation withthe International Monetary Fund and the World Bank because thatcooperation is a prerequisite for reforming the national economy andaccelerating its integration into the system of world economic relations.

Given the extensive practical experience of the IMF and the WorldBank, Belarus relies on their recommendations in formulating its eco-nomic policy. We have considerably tightened our monetary andexchange rate policy. We consider the IMF recommendations duringforecast preparation and budget planning.

While relying primarily on its own efforts to create an environmentfor stable yet dynamic economic development (average annual GDPgrowth over the past seven years amounted to 5.8 percent; industrialgrowth, about 8.5 percent, budget deficit, not more than 2 percent ofGDP), the government is urging the International Monetary Fund andthe World Bank to actively support the ongoing economic and struc-tural reforms in the country.

A distinguishing trait of the present economic policy of the govern-ment is a continued shift of focus on the liberalization of the economy.We proceed from the necessity to maintain and further strengthenmacroeconomic stability on the basis of tightened monetary policy.

We assign great importance to development of small and medium-size businesses and take measures to create business incentives andestablish a favorable environment for attracting foreign investment.

The Bretton Woods institutions should keep on playing the leadingrole in encouraging international cooperation so that globalizationand associated processes further contribute to human developmentand make its benefits available to everybody. Regional characteristicsand specificity of each country should underlie global and regionalcooperation in development financing. As proved by the commit-ments made at Monterrey and Johannesburg, such cooperation ispossible in coordination with the United Nations, the European Union,international financial institutions, and donor-countries. Only by

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consolidating the resources of Bretton Woods institutions and theirshareholders can the main outcome—stability in all regions and eachcountry—be achieved.

In our view, preparation by the world financial community of a jointaction plan for designing a new architecture of the world financialmarket deserves special attention. The new financial architecturerequires considerable strengthening of the role of international institu-tions, primarily that of the International Monetary Fund, meaning notonly strengthening of the IMF’s financial capacities, but also develop-ment of a legal and administrative framework as well as new regulationand procedures that would enable the IMF to take on more responsibil-ity for ensuring stability of the world financial system.

New challenges of the millennium are putting forth more and morecomplicated problems for mankind to solve. I hope the InternationalMonetary Fund and the World Bank will realize their high mission toassist their client countries in their striving for an effective market econ-omy and sustainable development.

BELGIUM: DIDIER REYNDERSGovernor of the Bank

I am honored to have the opportunity to once again address our JointDiscussions to present my country’s views on a number of importantinternational cooperation matters of fundamental importance to themissions and activities of our institutions. Before doing so, I would liketo express my thanks to the authorities of the United Arab Emirates fortheir hospitality and their excellent organization of these meetings.

My country, which is at the heart of an expanding Europe and isembarking on its own institutional reform, maintains its keen interest inpromoting international cooperation in the political as well as economicspheres. Accordingly, I would like first to comment on the global eco-nomic environment, then to discuss surveillance and the promotion ofstability, and finally to address the issue of the Millennium Develop-ment Goals.

Economic Situation

Following a significant slowdown in growth, and indeed recession ina number of countries, most economic indicators are now pointingtoward global economic recovery. In view of the remaining uncertain-ties and imbalances, the major question facing policy makers is that ofconsolidating this recovery and ensuring its sustainability. The key todoing this is likely to be found in more balanced macroeconomic poli-cies and strengthened structural actions.

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In the euro area it is anticipated that, following a disappointing year,growth will resume in the second half of 2003 and be strengthened in2004. The European countries have already implemented major struc-tural reforms and remain resolved to undertake the other reformscalled for under the Lisbon agenda. In these circumstances, the growthpotential of the European economy should thus be expected to improvein the future.

Economic growth in the United States is robust. The fiscal stimulusthat has supported economic activity has undeniably had a positiveimpact. However, the deficits it has engendered are unsustainable in thelong-term and mandate a credible consolidation program in order toensure that they do not further push interest rates upwards and cancelout the earlier stimulative effect.

Japan’s economy has recently shown signs of recovery. This is a pos-itive development. But there are still significant challenges facing theJapanese authorities, such as combating persistent deflation and thenecessary consolidation of public finances. Anchoring the economicrecovery will require further structural reforms, in particular in thefinancial sector.

External disequilibria continue to pose a threat to the global econ-omy and the stability of the international financial sector. Adjustingthese imbalances requires both stronger growth outside the UnitedStates, based in particular on a strengthening of structural reforms, andan orderly development of exchange rates, including on the part ofcountries with sizable external surpluses. In this connection, I welcomethe agreement reached within the IMFC on the need for the IMF tocontinue its focus on exchange rate issues across the membership.

The development of world trade is of critical importance for globaleconomic growth. Robust world trade will not only lead to greater realgrowth, but will also have a positive impact on general confidence in theeconomy and can make a critical contribution to combating poverty. Itis consequently of great importance, following the troublesome failurein Cancún, that the negotiations of the Doha Round get back on track.A consensus has emerged to this effect. The IMF can help us get thisprocess moving again, on the one hand by reemphasizing the fact thateveryone stands to gain from further trade liberalization and, on theother hand, by enabling countries experiencing transitional financingdifficulties in conjunction with such liberalization to have access to itsresources.

Surveillance and the Promotion of Stability

I salute the efforts made by the IMF to further enhance its efforts inthe area of surveillance and crisis prevention. As this preventive

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approach is of critical importance, it should be strengthened as a funda-mental pillar of IMF activities.

Belgium, which has undertaken major reforms as regards its finan-cial sector surveillance framework, including the establishment of aFinancial Stability Committee, will soon join a number of othermember countries in its constituency in undergoing the IMF’s review inthe context of the Financial Sector Assessment Program. Resolving theproblems of the banking system has required major financial efforts,including in the industrial countries. Monitoring the observance ofinternational standards and codes generally requires sustained atten-tion, and the following initiatives should be undertaken:

• perfecting the analytical tool on the basis of assessing balance sheetvulnerabilities rather than flows alone. This is a method we are devel-oping at the national level. Such an initiative may be expected, more-over, to mesh seamlessly with Article IV consultations. It concerns allof us, both emerging economies and the industrial countries;

• along the same lines, further developing the example of debt sustain-ability through sensitivity analyses and perhaps “stress tests” as well.The foundations of this approach are reflected in the stability andconvergence programs examined at the European level. The rele-vance of such an approach is particularly evident as regards the policyon access to Fund resources. It would also appear necessary in view ofthe expansion of public indebtedness in the emerging economies andother developing countries;

• illustrating more clearly the extent to which countries have failed to ob-serve the recommendations made during periodic surveillance exer-cises and taking this into account in the preparation of programs;

• further strengthening the transparency of data and information, so asto enable the market to play its role properly. It should be an assump-tion that Article IV consultation reports, reports on the use of Fundresources, and the IMF’s Public Information Notices (PINs) will bepublished. The publication of information, which must remain consis-tent with the requirements of the Articles of Agreement, is of partic-ular relevance in cases where the IMF itself is contemplating majorfinancial commitments vis-à-vis a given country.

As regards crisis prevention in general, the institutional frameworkin place at the national level plays an essential role. In effect, supervi-sory, planning, and decision-making bodies should have specific man-dates and clear missions, be adequately staffed, and have the ability toanalyze future prospects on the basis of reliable statistics. Institutionbuilding is therefore of particular importance. It should be the object ofincreased surveillance and, where necessary, technical assistance effortsby the Bretton Woods institutions.

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Generally, strengthened IMF surveillance is essential to the preven-tion of the emergence of new crises. Its interaction with other institu-tions, such as the Financial Stability Forum, is also necessary in order todetect residual weaknesses.

Again as regards preventive actions, the forthcoming disappearanceof the Contingent Credit Lines (CCLs), which is now inevitable in viewof their intrinsic flaws, does not mean that the problems they wereintended to address have been resolved. Accordingly, it would be advis-able to make better use of precautionary arrangements in order toachieve our objective and to reassure markets of the adequacy of thepolicies followed and, in so doing, prevent erratic market behavior andcontagion effects.

Crisis Resolution

Alongside the strengthening of preventive actions, it is important tostrengthen the mechanisms for crisis resolution. To achieve this objec-tive, a more orderly and more transparent mechanism for restructuringsovereign debt is required. In this connection, we welcome the progressmade in recent months with the introduction of collective action clauses(CACs) and in the development of a code of conduct. We also wish tostress the importance of a strengthened IMF strategy as regards loans tocountries facing payments arrears.

The inclusion of CACs in sovereign debt contracts is a componentthat can ensure, on the one hand, that any possible debt restructuringwill be carried out in as orderly a manner as possible and, on the otherhand, that a minority of creditors will no longer be able to initiateactions, which might prevent the majority of creditors from preservingthe value of their assets. In keeping with the political commitment madeby the European Union last June, Belgium has indicated its willingnessto include majority action clauses and collective representation clausesin all international sovereign bonds.

In the last year, many emerging economies and industrial countriesintroduced CACs in their sovereign borrowing contracts. We arepleased by the favorable response to these clauses on the part of thefinancial markets: their introduction has neither increased borrowingcosts nor reduced access to financial markets. With the latest issues ofinternational sovereign bonds by Italy and the United Kingdom, theEU has implemented the commitment made at last April’s meeting ofthe IMFC.

Last year, a G-10 working party (the Quarles group), with the assis-tance of representatives of the private sector and of emergingeconomies, examined the legal modalities underlying this contractualapproach. It proposed specific wording. We encourage sovereign bond

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issuers to introduce CACs as espoused by the G-10. On this basis andwith a view to achieving greater harmonization, the EU member states,represented by their finance ministers, have recently reached agree-ment on a common approach for introducing CACs in their interna-tional bond contracts. A more standard approach to CACs will, to besure, provide the markets with greater clarity and transparency.

The work toward developing a code of conduct is another importantstep toward the effective resolution of financial crises. We encouragethose working on this code of conduct to take into account variousissues of relevance for the orderly resolution of financial crises alreadycovered by the proposal for a Sovereign Debt Restructuring Mecha-nism (SDRM). In particular, these relate to questions of inter creditorequity, improved transparency and disclosure, and the problem ofaggregation. While it is perhaps not possible to establish the SDRM atthe present time, we do not believe that consideration of this issueshould be abandoned prematurely. A strengthened sovereign debtrestructuring mechanism will make it possible not only to resolve crisesin a more orderly manner, but will also improve the observance of therules on access to IMF resources.

Achievement of Millennium Development Goals (MDGs)

Eighteen months ago in Monterrey, the international communityreached agreement on an ambitious plan of action for reducing povertyand achieving the Millennium Development Goals. This importantchallenge can be met only if the developed countries and developingcountries alike shoulder their own part of the burden. While progresshas been made, in particular as regards identifying the actions to beundertaken, the MDGs can be achieved on schedule only if urgent stepsare taken. Accordingly, we cannot allow ourselves to scale back ourefforts if we seek to give the poor of this world the hope of a betterfuture.

The industrial countries should honor their commitments andensure that there is an increased and continual flow of long-termresources. In this connection, Belgium will fully assume its responsibili-ties. I wish in particular to refer to my country’s commitment to achievethe goal of 0.7 percent of GDP by 2010. In turn, the developing coun-tries should continue to strengthen the reform process and ensure that itis ongoing, in particular with a view to improving the investment cli-mate, the management of the public sector, governance, and the avail-ability of public services. This new partnership is reflected specifically inpoverty reduction strategies that are formulated and implemented bycountries in the most participatory manner possible.

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I call upon the Bank and the Fund, as well as other multilateral andbilateral donors and lenders, to adjust their policies and proceduresbetter to those of the developing countries so as to enhance aid effec-tiveness. To these ends, I also encourage the donor community to assistbeneficiary countries in building their institutional capacity. Indeed, wemust avoid granting development assistance in the absence of adequategovernance structures. The experience of the HIPC Initiative hastaught us that establishing more transparent and better performinginstitutions is essential for the effective use of the resources freed bydebt relief operations.

This said, the international donor community must not disregard theneeds of countries in post conflict situations. In this regard, Belgium, incollaboration with its partners, will continue to play a dynamic role insupporting a peace and reconstruction process in the Great Lakes region.

Finally, I wish to reiterate that increased aid and the developmentobjectives of the Doha agenda are complementary. Given the disap-pointment at Cancún, I encourage both the developed countries and thedeveloping countries to renew their dialogue so that an acceptable com-promise can be achieved as rapidly as possible. A positive result in thisregard is essential if we wish to achieve the Millennium goals.

Belgium will participate in the reconstruction of Iraq insofar as theUnited Nations and the Bretton Woods institutions are called upon toplay a central role in it. Security arrangements which enable these insti-tutions to function normally will have to be ensured. In the final analysis,it is up to the Iraqi authorities themselves to assume responsibility forthe reconstruction of their country. Belgium stands ready to support theconcept of the creation of a trust fund under the auspices of the Bank.

In conclusion, I wish once again to thank the authorities of theUnited Arab Emirates and to express the strong desire and ferventhope that the efforts of the International Monetary and Finance Com-mittee and the Development Committee may lead to concrete actionsin the year ahead.

BOSNIA AND HERZEGOVINA: ADNAN TERZICGovernor of the Bank

In the period after the war, with the support of international com-munity, Bosnia and Herzegovina has gone a long way toward reachingeconomic self-sustainability. The government of Bosnia and Herzegovinais very grateful to donors for the support given to our country in the lastseven years, and especially to the World Bank and European Commis-sion on their very successful coordination in mobilization and imple-mentation of international assistance.

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In the last seven years significant results have been accomplished:

• Peace was stabilized.• A significant level of political agreement was accomplished regarding

the most important questions about implementation of the DaytonPeace Agreement, including the process of strengthening the statelevel.

• The return of greater numbers of refugees and displaced persons wasensured.

• Collaboration with countries in the region was strengthened.• Membership in the Council of Europe was achieved.• The process of integration into the European Union started as

well as the process of getting full membership in the World TradeOrganization.

In the same time period, on the economy plan, good results havealso been noted in the following:

• GDP was tripled in comparison to the period just after the war.• The infrastructure that was destroyed during the war was

reconstructed.• Macroeconomic stability was sustained: current inflation in the coun-

try is about 1 percent.• The convertibility of the currency has been maintained. This convert-

ibility is based on the monetary policy based on the currency board.National reserves have increased 15 times.

• Consolidated budget deficit has been decreased to 3 percent com-pared to gross domestic product.

• Foreign debt was regularly serviced.• The process of tax reform has began with a goal of introducing a

value added tax until 2005.• The reform of judiciary and public sector administration is under way

with a goal to increase efficiency and decrease corruption.• The International Monetary Fund stand-by program has been kept,

and next year we are beginning with negotiations on a new midtermprogram.

• The privatization of banking sector has been finalized. The result wasthe return of trust in the domestic banking sector: the level ofdeposits in the last year increased 25 percent.

• In a great number of companies the privatization process has beenfinalized.

• The process of liberalization in the sectors of telecommunicationsand energy has begun.

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• The level of foreign investment in comparison to last year has dou-bled. The following investors are already in Bosnia and Herzegovina:VW, Coca Cola, Austria Bank, Volksbank, SIEMENS, HeidelbergCement Group, and many others.

However, we are still faced with numerous challenges:

• The unemployment level in the country is at around 40 percent.• The level of poverty is 20 percent.• Trade deficit is still high. Therefore the current account deficit is also

high and is 17 percent of gross domestic product.

In this year, we are planning to complete preparations of the devel-opment strategy of Bosnia and Herzegovina (Poverty Reduction Strat-egy Paper), so that we can start with its implementation in the period2004–07.

Significant objectives of the PRSP are to:

• regain the creditworthiness of the country by 2007;• decrease level of poverty for one third; and• decrease the current account deficit to around 10 percent of gross

domestic product.

To accomplish these objectives, we are determined to:

• ensure a higher level of real economic growth from the current 3.5percent to about 6 percent by 2007;

• maintain macroeconomic stability and monetary policy based on thecurrency board;

• decrease the level of public expenditures from the current 56 percentin relation to GDP to about 46 percent;

• reorganize the tax system (introduce VAT) and establish joint customsadministration at the state level;

• ensure faster private sector growth and increase the level of foreigndirect investment by (a) creating better business environment fordomestic and foreign investments, (b) speeding up the process ofprivatization, (c) decreasing the tax burden on the economy, and(d) reforming the judiciary system and public administration;

• implement welfare reforms;• implement reforms in education and health system; and• implement labor market reform.

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The aforementioned reforms should lead to increasing export anddecreasing current account deficits, which now represents a threat tomacroeconomic stability. The second big threat to macroeconomic sta-bility is the high level of domestic debt, which is about 90 percent inrelation to GDP. The governments will adopt a plan for decreasing thedomestic debt by the end of this year.

Parallel to the process of speeding up reforms, the governments areworking actively on the integration of Bosnia and Herzegovina into theEuropean Union and this represents the highest priority of our countryin the coming period.

We appreciate the fact that we have made considerable results for acountry that not long ago came out of the war. We are aware of the factthat big credit for our success belongs to the international community,which has in many ways, and especially through the Office of the HighRepresentative, been present in Bosnia and Herzegovina. However, ourwish is that in the following period we decrease the influence of theinternational community and fully take over the decision-makingprocess concerning all matters with regard to the future of our country.Just to illustrate this, I would like to mention the fact that last year, forthe first time, we organized elections on our own. Moreover, thissummer, without influence of the international community, we agreedand adopted the action plan for realization of urgent reforms in the nextsix months. The implementation of this plan is going very well.

Our wish is to return the creditworthiness of the country in the nextmidterm and to make a significant movement toward European integra-tion. We regard further developing the private sector and attracting moreforeign investments as the main motors of the economic development inthe next period. We are very encouraged by the fact that for the first time,one large international investment bank such as Bear Stearns made avery positive report on the numerous possibilities to invest in our country.However, the reality is that Bosnia and Herzegovina is still not creditwor-thy. On the other hand, the current investment crisis in the world, and thebig drought we suffered this year, will slow economic growth for this yearand the best part of next year. Therefore, in the next midterm period wewill continue to need international assistance. It is an important to securea gradual and avoid a sharp decline in international assistance.

Bosnia and Herzegovina is a unique success story for a post-conflictcountry, and the unique case in which donor assistance managed tomake a great impact in rebuilding the society. We are very close to cred-itworthiness and self-sustainability—all the more reason to prevent asharp decline in donor assistance to our country. For their part, govern-ments in Bosnia and Herzegovina will remain committed to the reformprogram, which is formulated in the PRSP that we plan to approve bythe end of this year.

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BURKINA FASO: JEAN BAPTISTE COMPAOREGovernor of the Fund

(on behalf of the African Governors)

Introduction

We African Governors thank the authorities of the United ArabEmirates for hosting the 2003 Annual Meetings of the World Bank andIMF and for the hospitality extended to us. We commend them for theexcellent facilities and the efficiency in the preparations of the meetings.

Global Economic Outlook, Risks and Policies

We note that there are encouraging signs of an upturn in the globaleconomy, after a prolonged period of sluggish recovery. At the sametime, we are mindful of the risks that continue to weigh on the upturn.In particular, the recovery is not broad-based across the major indus-trial countries, with the United States remaining the major engine ofglobal output growth. The recovery is also associated with major cur-rent account and fiscal imbalances that have the potential to sparkdisorderly adjustment in major currencies and undermine export ledrecovery. Moreover, the failure of the Cancun WTO Ministerialmeeting is a major setback to efforts to enhance growth and reducepoverty in Africa and other developing regions. In addition, struc-tural impediments in major economies, uncertainties in the oilmarket and geopolitical uncertainties are sources of concern to thenascent recovery.

In this context, there is need for a global cooperative approach onpolicies to strengthen the recovery process and to avoid the disorderlyunwinding of global imbalances. Structural reforms need to be acceler-ated in the labor and product markets in the Euro area while aggressivemeasures are needed to address deflation in Japan. Emerging marketeconomies need to persevere with strong macroeconomic policies whileaddressing structural impediments and strengthening financial systemsto reduce vulnerabilities.

Enhancing Growth Prospects and Poverty Reduction in Africa

Growth in Africa, though low compared to potential, has remainedresilient, in spite of the global slowdown, reflecting major improve-ments in our macroeconomic policies and the positive impact of debt

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relief under the HIPC Initiative. Most countries on the continent haveachieved macroeconomic stability and undertaken key structuralreforms. Fiscal deficits for Africa have been reduced and annual aver-age inflation is leaning towards the single digits. Notable progress hasalso been made in reducing current account deficits and in liberalizingtrade and exchange systems.

Notwithstanding these achievements, economic growth rates remainfar lower than needed to halve extreme poverty by 2015. The continenthas the highest rates of unemployment in the world; it remains the mostafflicted by the HIV/AIDS pandemic, and is most vulnerable to exoge-nous shocks, particularly to adverse weather and commodity price fluc-tuations, and most prone to regional conflicts and civil strife. Thecurrent international geopolitical situation and the related security con-cerns is adversely affecting our tourism sectors and is also contributingto higher insurance premiums, adding new areas of vulnerability.

Against this background, we acknowledge that Africa faces thegreatest challenge in meeting the MDGs. With this bleak outlook, wehave resolved to redouble our efforts on a number of fronts: addressingconflicts which hinder economic development and undermine the effec-tiveness of private sector investment, of which our political leadershipexpressed strong commitment during the recent African Union Summitin Maputo, Mozambique; sustaining prudent economic policies; intensi-fying the fight against HIV/AIDS and Malaria; investing in infrastruc-ture and accelerate economic integration in Africa, which offers manyopportunities for trade expansion and economic diversification; and,strengthening the role, design, and monitoring of our PRSPs. To com-plement our efforts, we count on the support of the Bank, Fund and thedonor community in mobilizing adequate financial resources and tech-nical assistance to enable Africa and other poor regions

Mobilizing International Support for the MDGs

In Monterrey, the international community expressed support formobilization of financial resources, estimated at US$100 billion peryear, needed to achieve the MDGs. Since then, a number of commend-able initiatives and undertakings have been announced by the UnitedStates, Canada, the EU, and the UN, to raise additional financing andto increase ODA. Also the International Finance Facility proposal bythe U.K. authorities has the potential to raise the extra US$50 billionper year needed to achieve the MDGs and deserves the support of theinternational community. We wish to underscore that failure to urgentlyaddress the financing gap could jeopardize the objective of having acritical mass of countries achieve the MDGs.

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Fighting HIV/AIDS and Malaria

We recognize that important steps have been taken by the Bank andthe Fund to help combat the HIV/AIDS pandemic. However, theseefforts are currently limited to a few countries. As HIV/AIDS knows noboundaries, such restrictions will hamper region-wide attempts to stopthe spread of this disease. Hence, it is imperative that HIV/AIDS is confronted in both middle-and low-income countries. We urge theinternational community to pool resources to fight the HIV/AIDS pan-demic in a regional context and to make global funds for HIV/AIDSmore accessible.

As we intensify our efforts at combating HIV/AIDS, we should notlose sight of the devastating impact of Malaria on our human capacityand our economies. It is estimated that Malaria costs Africa more thanUS$12 billion annually, yet it can be controlled for a very small fractionof that amount. We urge the Bank and the international community toprovide adequate financial resources as well as research support aimedat eradicating Malaria.

Education for All by 2015

We reiterate our commitment to give the Education For All (EFA)Initiative every support necessary to make it successful by increasingbudgetary support, transparency and efficiency, and strengthening mon-itoring of outcomes in the education sector. At the same time, werequest our development partners to allocate larger and more pre-dictable assistance to our education programs, including long-termfinancing commitments for recurrent expenditures. We urge the Bankto increase its financial and technical support and to strengthen theadvocacy role for the EFA Initiative.

African Economic Integration

Promotion of regional trade and economic integration initiatives aregaining currency worldwide and our political leaders have committedthemselves to this goal in the context of NEPAD. Africa’s economicintegration will allow our individual economies access to a biggermarket, attract FDI, diversify the productive and export base, andachieve the high and broad based growth rates needed to achieve theMDGs. In this vein, the NEPAD framework should be used as a hub forchanneling assistance for Africa’s economic integration by the BWIs.

To facilitate and accelerate Africa’s economic integration, there isa need to develop and modernize regional infrastructure, merge and

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strengthen capacity of regional institutions, and develop regionalcapital markets and financial instruments. We commend the workbeing done by the Bank in these areas. The Bank’s Regional Integra-tion Strategies for West Africa and Central Africa are important ini-tiatives which should be extended to other regions, including Eastern,Northern, and Southern Africa. Overall, we urge the Bank, Fund,and other development partners to support Africa’s economic inte-gration and to forge cohesion and build capacity in our regional insti-tutions.

Infrastructure Development

A major constraint to economic growth and regional integration inAfrica is the lack of modern infrastructure. In particular, the high costof air, road and sea transportation, electricity, and telecommunicationsmakes it difficult for most African countries to foster private sector-ledgrowth and to attract FDI. Moreover, lack of access of the rural popula-tion to roads, telecommunications, railways, ports, water and electricityhinders progress towards achieving the MDGs. To address this keychallenge, we are gearing our efforts towards developing efficientdomestic and regional financial systems with a view to mobilizingdomestic and regional resources in support of infrastructure develop-ment. We will also promote partnerships with the private sector indeveloping infrastructure.

We welcome the Bank’s commitment to leverage funds for infra-structure services using a blend of IBRD/IDA, IFC, and MIGA instru-ments and products. In addition we urge the donor community tofacilitate the pooling of resources for regional infrastructure develop-ment in Africa, and the Bank and the Fund to catalyze the pooling ofsuch resources.

Economic Diversification

To attain the minimum 7 percent growth that is needed to meet theMDGs, African economies need to expand and diversify their produc-tive and export base. The need for diversification has long been recog-nized but very little has been achieved. Deliberate and targeted policyinitiatives are also necessary to promote diversification as has been thecase in such countries, as Mauritius and the Asian Tigers. These policiesinvolved identification of the drivers of economic growth and the provi-sion of the necessary support, including temporary access to conces-sional financing and fiscal incentives. We are eager to engage in adebate with the BWIs and the donor community on these incentives,with a view to drawing lessons from successful cases.

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Private Sector Development

Promoting private sector initiative is critical to enhancing Africa’sgrowth potential. While some African countries have experiencedhigh growth rates, these were mainly driven by large FDI projects andthis growth has not been instrumental in reducing the high rates ofunemployment, while broad-based private sector participation remainsconstrained. Small- and Medium-Scale Enterprises (SMEs) represent amajor engine of growth and employment in African countries and cancontribute to accelerated progress towards the MDGs. In this context,there is need to address these constraints that hinder private sectoractivities in general and SMEs in particular. We recognize the WorldBank Group’s initiative to coordinate support to micro, small- andmedium-scale enterprise development in sub-Saharan Africa (SSA)and recommend that these initiatives be strengthened. We urge theWorld Bank to review the role of MIGA and enhance its effectivenessin facilitating more FDI in Africa. We urge the IMF, in the design ofprograms, to promote fiscal and monetary frameworks that facilitateaccess to affordable domestic credit to SMEs.

Trade

Industrial countries maintain wide-ranging tariff and non tariff bar-riers against exports from developing countries, contrary to WTO rulesand the Uruguay and Doha trade rounds. It is estimated that totalpublic support to agriculture in OECD countries is more than US$300billion annually, six times their ODA budgets. Barriers to developingcountries’ textiles exports cost 27 million jobs. The benefits of full liber-alization of world trade in goods are enormous and could lift an addi-tional 300 million people out of poverty by 2015 and it is estimated thatincome from exports of agricultural products could triple from US$10billion to US$30 billion if OECD agricultural subsidies are removed.

We welcome that a number of African countries are benefiting fromspecial initiatives like AGOA and EBA and others that offer opportu-nities for expanding exports. At the same time, we caution that theseinitiatives should not undermine the conclusion of the more compre-hensive trade agreement under the Doha Round. Against this back-ground we cannot but express our deep disappointment with the failureof the Cancun WTO Ministerial meeting to make progress on the manyimportant issues that were put on the table during the Doha Round,particularly the removal of agricultural subsidies in developed coun-tries. As pointed out in your joint letter prior to the Cancun meeting,progress on the removal of agricultural subsidies would strengthen oureffort in reaching the MDGs. Accordingly, we urge the Bank and the

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Fund to intensify their advocacy role for a faster conclusion of the DohaRound in order to create a level playing field in areas of trade wheredeveloping countries have an interest and comparative advantage.

Progress in HIPC Initiative Implementation

The heavy debt burden remains a key constraint to achieving theMDGs and we are concerned that there are a number of outstandingproblems that undermine the effectiveness and credibility of the HIPCInitiative. These include:

• progress in implementation has stalled, as only two countries havereached the completion point since our meeting last year and onlyeight countries have reached this milestone since the launching of thisinitiative;

• creditor participation remains problematic as many non-Paris Clubbilateral creditors have not agreed to deliver debt relief under HIPCterms;

• a number of creditors have resorted to litigation against HIPCs, forc-ing our countries to spend scarce resources in legal fees;

• outstanding HIPC-to-HIPC claims continue to pose a financial andmoral dilemma for our countries;

• the HIPC Initiative remains under-funded as a number of countries,particularly those in protracted arrears were not included in the ini-tial costs of the Initiative;

• lack of realism in the projection of macroeconomic variables and theimpact of exogenous factors, including fluctuations in commodityprices has contributed to the need for continuous topping-up of debtrelief at the completion point;

• notwithstanding the delivery of debt relief under the HIPC Initiative,debt sustainability remains illusive for many of our countries thathave reached the completion point; and

• the sunset clause should continue to be extended to allow the remain-ing eligible countries to benefit from the HIPC Initiative.

These have been our major concerns since the launching of theHIPC Initiative and we have raised them every year. It is becomingincreasingly evident that addressing these issues entails taking seriousmeasures that may include revisiting the HIPC framework. In additionto the heavy external debt burden, our countries’ efforts are crippled byhigh domestic debt, which limit the scope for increasing budgetary allo-cations to social sectors and other poverty reducing initiatives. We urgethe BWIs and the donor community to assist our countries in alleviatingthe burden imposed by high domestic debt. Moreover, there are thoselow income African countries that are classified as non-HIPC even

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though their socioeconomic characteristics are similar to those of HIPCcountries. We urge the Bank and the Fund to consider extending the eli-gibility criteria so that these countries can benefit from the HIPC Initia-tive and from the Evian Agreement.

Some countries in protracted arrears have come a long way instrengthening their cooperation with the BWIs and the internationalcommunity, yet the resolution of their arrears situation and their simul-taneous access to the HIPC Initiative and other concessional resourcesremain uncertain. We urge the BWIs to catalyze innovative solutionsfor this group of countries.

Regarding post-conflict countries, it should be recognized that theyface enormous challenges in consolidating peace and internal stabilityand rebuilding physical and institutional infrastructure, while attempt-ing to pursue sound economic policies. Accordingly, we urge the BWIsand the international community to exercise greater flexibility in deal-ing with these countries and, in particular, to accelerate access of thesecountries to the HIPC Initiative. The Fund should also continue tomobilize resources to enable access to post conflict emergency assis-tance on concessional terms. We urge the Fund to revisit the repaymentterms under the Emergency Post-Conflict Assistance with a view toaligning them to PRGF or more concessional terms.

Program Content and Design

The PRSP is gaining wide acceptance and ownership is deepening.Our goal is to make our PRSPs the springboards of our developmentefforts, mobilize external support and assess our progress towardsmeeting the MDGs. The BWIs should complement our own efforts infurther enriching the micro- and macroeconomic content of our PRSPs,identifying new sources of economic growth, developing alternativepolicy scenarios and contingency planning to hedge against exogenousshocks, developing comprehensive statistical databases and conductingpoverty and social impact analyses (PSIAs). We will seek to continuecatalyzing domestic consensus to further strengthen ownership in thePRSP process. In this regard, we welcome the outreach programs beingdeveloped by the Bank and the Fund to enhance communication withnational legislators. In designing the PRGF/PRSC, we urge the Bankand the Fund to continue to be guided by the objectives and priorities inour PRSPs and we urge donors to align their assistance programs to ourPRSPs. In addition, we urge the donor community to harmonize the cri-teria and procedures for disbursement of aid and to synchronize theirassistance programs with our PRSPs and domestic budget cycles.

While recognizing the traditional role of the Fund in providing tem-porary balance of payments assistance, we are of the view that program

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design in low-income countries should be better adapted to take intoaccount the necessity to provide technical and financial assistance overa longer time period and on more concessional terms. We are pleased tonote that the IMF Board shares our views as was reflected in the recentBoard discussion on the Role of the Fund in Low-Income Countries.Indeed, these are the countries which are the most vulnerable to exoge-nous shocks, to natural calamities as well as epidemic and pandemic dis-eases. In this regard, we urge the Fund to move speedily to developmodalities for timely assistance in response to shocks experienced byPRGF-eligible countries. This should include augmentation of PRGFarrangements and other options that are necessary to boost medium-term growth prospects. In addition, for countries that are graduatingfrom use of IMF resources, there is need for the donor community tobegin de-linking their assistance from Bank/Fund programs and to relymore on our PRSPs.

Assistance to Middle-Income Countries

A number of countries in Africa are classified as middle-income, yetthey are among those with the highest income inequality in the world asreflected by high Gini Coefficients, the implication being that a largesegment of their populations live in absolute poverty. The HIV/AIDSpandemic has imposed an additional and severe burden on some ofthese countries. Also, some have heavy external and domestic debt bur-dens and many depend on export of a single commodity. We urge theBank, including IDA Deputies, the Fund and the international commu-nity to provide concessional resources needed to reduce poverty and tofight the HIV/AIDS in these countries.

Capacity Building in Africa

Institutional and human capacity building is critical for sustainabledevelopment and poverty reduction. It is a long-term process whichrequires strong political will as well as adequate and predictable fund-ing. The African Union passed a resolution declaring 2002–11 as thecapacity building decade for Africa. We commend the Bank for its con-tinued commitment to help our countries achieve this objective andwelcome the proposed secondment of professionals from our countriesto the World Bank. We urge the Bank to implement this program imme-diately. We also welcome the full membership of the IMF in the ACBFand we urge the recently established AFRITACs to work closely withour regional institutions, including on issues of staffing. We urge theBWIs to further increase their financial support to, and advocacy for,capacity building in Africa.

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Voice and Participation of Developing Countries in the BWIs

As declared in Monterrey Consensus and later affirmed in thespring 2003 Development Committee Communiqué, enhancing thevoice and effective participation of developing and transition countriesin the work and decision-making of the BWIs can significantly con-tribute to enhancing the effectiveness of reform programs as well aspromoting international cooperation. In this regard, we remain con-cerned that as many as 47 countries of sub-Saharan Africa are repre-sented by only two chairs on each of the BWI’s Executive Boards.Furthermore, the quota share and voting right of Africa continue todecline, further undermining our voice and effective participation inthe two institutions.

Against this background, and while welcoming the recent increase instaff for our Executive Directors’ offices, we urge the BWIs to supportand undertake further reforms aimed at strengthening the capacity andvoice of African countries. In particular, we recommend the provisionof additional chairs for Africa. Regarding the continuous decline of ourcountries’ quotas in the IMF we strongly urge that in the context of theThirteenth Review of Quotas, this trend be reversed. Furthermore, weurge the two institutions to reestablish relative size of the basic vote toits original level. These would be important steps in restoring the votingpower of African countries to allow them to fully participate in the deci-sions that affect them in the BWIs.

Regarding IDA, our key concern is the limited involvement of ourcountries in the decisions taken by IDA Deputies. We acknowledge theprogress made in the IDA replenishment process by involving borrowercountry representatives, albeit in a limited way. That said, we feel thatmore progress in this regard is needed, particularly by reasserting the roleand mandate of IDA’s Board in setting and approving the policies ofIDA. This is more so given that all developing member countries are rep-resented in the IDA Board. This action will be consistent with the appro-priate governance structure of IDA under its Articles of Agreement.

African Staffing Issues in the Bretton Woods Institutions

African staff in the IMF and the World Bank are part of the strongassets of these institutions as much as for the development of Africa.However, their ability to contribute their fullest potential is still con-strained by a number of visible and other invisible barriers. We welcomeprogress being made to address this issue but urge the management ofthe two institutions to do more to ensure that African nationals areaccorded level playing field and equal opportunity to give their best andacquire rounded experience and expertise in the two institutions.

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CAMBODIA: CHEA CHANTOGovernor of the Fund

It is a great pleasure and honor for me to address the 2003 AnnualMeetings of the Boards of Governors of the World Bank Group and theInternational Monetary Fund in this very nice city of the United ArabEmirates. On behalf of the Royal Government of Cambodia (RGC), Iwould like to take this opportunity to express our deep appreciation tothe Bretton Woods institutions for assisting Cambodia in its efforts toreconstruct and develop its nation after the 1991 Paris Peace Agree-ment and for continuing to support the RGC’ s economic and adminis-trative reforms that are crucial for broad-based economic growth andsustainable development. I would like also to extend our sincere grati-tude to the UAE government for the high quality of the arrangementsthat have been made for these meetings and the warm hospitalityextended to our delegation during our stay in the UAE.

Cambodia has achieved relatively high economic growth during thelast several years, boosted by rapid growth in the garment sector forexport and tourist-related activities in the context of peace and politicalstability. Since the economy has relied significantly on garment export,tourism, and foreign direct investment, the strength of the global andregional economy is an important factor in achieving high economicgrowth for Cambodia. In this regard, we are pleased to note mountingexpectations for a global economic recovery this year and beyond. It isgood especially to know that the U.S. economy at large begins to showsome positive trends; the economic recovery outlook for Japan hasimproved, and the 2003 growth projection is higher than the previousyear; other major economies in Asia also show improved performance.We hope to see improvement in the Euro economy during the rest ofthe year as well. The prospects for continued economic growth inASEAN countries look good—an optimistic view expressed by the del-egates at the Thirty-Fifth ASEAN Economic Ministers Meeting inPhnom Penh, Cambodia on September 2, 2003—despite the effects ofsevere acute respiratory syndrome and terrorism on the economy.

The economy of a developing country like Cambodia depends also onits successful integration into the global and regional system. Cambodiahas made a lot of progress in this area. In 1998, the RGC reclaimed itsofficial seat at the United Nations. Then, Cambodia’s relations with theIMF, the World Bank, and the Asian Development Bank were normal-ized. In April 1999, Cambodia became a full member of the regionalgrouping, the Association of South East Asian Nation (ASEAN). Inaddition, Cambodia is now a full member in many key internationalorganizations including the UN System, World Customs Union, Multi-lateral Investment Guarantee Association, and the International

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Centre for Settlement of Investment Disputes. Recently, Cambodiahosted a large number of historic international events in the context ofASEAN, ASEAN+1, ASEAN+3, ASEAN+India, and the First GreatMekong Sub-region Summit, etc. Just this month, Cambodia’ s entry tothe World Trade Organization (WTO) has been made official. Cambo-dia is the first least-developed country to be admitted into the WTO.Cambodia’s successful accession to the world trade body has beenhailed as a revolution in the history of the WTO as no poor country hasever gained such status. All current WTO members warmly welcomeCambodia’s membership. They have commended the RGC for beingable to meet the stringent and voluminous conditions for WTO mem-bership. In particular, they appreciate Cambodia’s strong commitmentto democracy, principled respect for human rights, transparent and pre-dictable promotion of a market economy.

Cambodia has embarked on trade liberalization in the context of theASEAN arrangements and the IMF-supported programs. Althoughthis trade liberalization exercise brings some risks, the RGC finds it tobe a necessary means to achieve economic growth and to facilitate itsglobal economic integration. The global integration should offer anopportunity to developing countries to survive a harsh and fierce globalcompetition through a package of concessions and commitments frommore-developed members. To allow poor countries to fully benefit fromglobalization, industrialized countries should open more widely theireconomy to developing countries, especially those countries that havecommitted themselves to liberalizing their trade. In this respect, wewould like to call on more-developed members to positively respond tothe demand of developing countries for major concessions, includingthe slashing of subsidies and tariffs on farm products and to produce amore pro-poor treaty on liberalizing international trade.

Now let me brief you on the recent economic development and eco-nomic issues in Cambodia. Economic performance was good during thelast several years. The economy was estimated to grow by 5.5 percent inreal term in 2002 compared with 6.3 percent and 7.7 percent in 2001 and2000, respectively. This 2002 growth estimate was based on robust con-struction activities, strong performance of garment exports, and tourist-related activities. The agricultural sector, which accounted for morethan one third of the total product, suffered from flooding and drought.During the first several months in 2003, the economy was adverselyaffected by the SARS outbreak. Garment export and agricultural sectorare expected to be strong this year. Nevertheless, the 2003 growth isprojected to be a little lower than the 2002 growth because of weakertourist sector and lower level of investment.

The last five years were characterized by a remarkable macroeco-nomic stability due to a prudent monetary policy. The inflation rate was

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less than 1 percent between 1999 and 2001, and 3.1 percent in 2002; thatwas still within the government’s determined target range of below5 percent. For the first seven months in 2003, CPI rose by 0.34 percentand the annualized inflation rate for July 2003, based on three-monthCPI average, was 1.53 percent. The value of domestic currency waslargely stable during these years, depreciating by less than 2 percentannually on average against the U.S. dollar. This positive state of theeconomy was also reflected in the steady increase in the internationalreserves, which grew by more than double during the last six years.During the first eight months, the riel depreciated by 2.5 percent in rela-tion to the U.S. dollar while the international reserves increased a little.

The macroeconomic stability was also underpinned by good fiscalperformance. During this period of stability, fiscal balance was more orless maintained and bank financing of the government’s budget wasavoided. In 2002, domestic revenue and budget expenditure were moreor less at the level stipulated in the 2002 budget law despite the conductof the first commune election in the country during that year. However,revenue collection during the first seven months in 2003 was weak anduse of domestic bank financing was observed. The National Bank ofCambodia has monitored closely the bank financing of the govern-ment’s budget to ensure it is within the range permitted by law and hasworked with the Ministry of Economy and Finance on an appropriatepolicy mix to mitigate any impact of this financing on the macroeco-nomic stability.

Despite the progress made in the last few years, the RGC is con-scious of challenges associated with international trade and investmentand the creation of foundation for a broad-based economic growth andsustainable development. To meet these challenges, the RGC has com-mitted itself to accelerating and deepening a wide range of reformsaimed at strengthening government capacity, enhancing transparency ingovernment interaction with the private sector, promoting privatesector enabling environment, strengthening governance, promotingfinancial intermediation, and other reforms that are conducive tobroad-based growth. Successful implementation of these reform meas-ures will help develop not only a broad-based economy, but alsoenhance Cambodia’s competitiveness in the world market, which is oneof the biggest challenges as Cambodia is now a WTO member.

As you may know, Cambodian people have cast their vote in thecountry’s third general election that took place just two months agoand that has been considered in general as free and fair. The politicalparties are now working to solve their differences and a new govern-ment will be formed soon according to the people’s will and the consti-tution of the Kingdom of Cambodia. The next government will need tocontinue to implement the reform measures with the aim of creating a

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solid foundation for a broad-based economic growth and sustainabledevelopment.

It is worth mentioning the valuable contribution of the BrettonWoods institutions to the stability and economic growth that Cambodiahas achieved during the last several years. Cambodia has received tech-nical assistance from the IMF in many areas as well as financial assis-tance in the context of ESAF and its successor PRGF arrangements.The first three-year PRGF arrangement for Cambodia was successfullyconcluded early this year. In the context of this PRGF arrangement, awide range of government reforms have been implemented, thusimproving the foundation for a sustainable development and facilitatingthe country’ s global and regional integration. The World Bank hasactively assisted Cambodia from the outset in its reconstruction afterthe 1991 Paris Peace Agreement, in development of physical infrastruc-tures as well as in implementing many important projects that have pro-moted economic growth and poverty reduction. We are sure that theIMF and the World Bank will continue to support Cambodia and otherdeveloping countries in their efforts to achieve a sustainable develop-ment and successful participation in the global and regional system.

Finally, I would like to express our deep gratitude and appreciationto the management and staff of the IMF, the World Bank, other inter-national and regional institutions, and donor communities for theirvaluable assistance and support to Cambodia. Given our limited capac-ity and lack of human and financial resources, we continue to look for-ward and welcome technical and financial assistance in any form in anyarea from the international and regional financial institutions as well asfrom other donor communities. We thank you for your good willtowards Cambodia, its people and its government.

CANADA: JOHN MANLEYGovernor of the Bank and the Fund

I would like to begin by thanking our hosts, the United Arab Emi-rates, for providing the venue for the first Bank/Fund meetings in theMiddle East. Our meeting in Dubai comes at a particularly critical timefor the region, where many states have taken important steps towardsgreater democratization and reform, and where recent events in Iraqprovide us with both opportunities and serious challenges. Morebroadly, the global economic outlook is clearly more favorable than itwas six months ago. There are signs of stronger growth in many coun-tries, but major risks remain and continued vigilance is needed to sus-tain more robust growth over the coming year. A sustained period ofmore rapid economic growth in the developing world is required forfurther progress toward poverty reduction in low-income countries.

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Canadian Economic Prospects

Canada’s economy grew strongly through the early part of this year.The negative impacts of a recent series of shocks are expected to beshort-lived, and Canada’s strong fundamentals and a strengthening U.S.recovery are expected to support growth in the second half of 2003.Both the IMF and OECD forecast Canada to perform near the top ofthe G-7 in growth in 2003 and 2004.

Risks to the Global Outlook

Global economic prospects look brighter than in the spring, withsigns of stronger growth in the United States and Japan, and someimprovement in consumer indicators in select European countries. Nev-ertheless, there are areas of the world where the outlook is still lacklus-ter. Growth in much of Europe continues to languish and has beenuneven in some of the key emerging market countries.

Major risks to the outlook remain, and a major challenge is to makethe structural changes necessary to underpin solid medium-termgrowth. Fiscal policy needs to be put on a sustainable medium-termtrack, especially in industrial countries with aging populations, but alsoin emerging market economies, which remain vulnerable to shifts infinancial market sentiment. Financial systems have to be strengthened,particularly in emerging market economies playing an increasinglyimportant role in international financial markets. However, industrialcountries also have regulatory gaps and vulnerabilities that need to beaddressed. And external payment imbalances pose a risk of exchangerate instability and increased trade tensions. These imbalances have tobe addressed cooperatively and constructively with effective structuralreforms and sound monetary and fiscal policies that are aimed at pro-moting sustained growth, open trading regimes, and flexible exchangerate adjustment.

Enhancing Crisis Prevention and Resolution

The Fund’s surveillance role is critical in identifying emerging prob-lems and policy imbalances before they become crises. Although theFund has made progress in making surveillance more effective, includ-ing through strengthened debt sustainability assessments, more candoris still needed in the Fund’s assessments of country situations.

The Fund’s more holistic approach to surveillance is encouraging. Itis putting an increased emphasis on sound institutions and the rule oflaw, and more closely examining political economy issues and owner-ship of programs. The Fund could do even more to help build ownership

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by publishing more of its documents, facilitating a meaningful dialoguewith interested parties, and leading to better policy design and enhancedpublic support for reforms. Program ownership could be further strength-ened if Fund documents included scenarios that clearly spell out the costsof policy inaction, assuring publics that often difficult reforms are indeednecessary and have significant medium-term benefits.

Good progress has also been made in improving the crisis resolutionframework over recent years, including setting out the criteria and pro-cedures for exceptional access lending and the widespread adoption ofcollective action clauses in international sovereign bond contracts.Work is underway to develop a code of conduct to guide debtor-creditorrelations. But the framework should be regarded as a work in progress,with more work still to be done on issues related to debt restructurings,such as inter-creditor equity and aggregation issues.

Achieving the Millennium Development Goals

Low-income countries face significant challenges to put themselveson a more sustainable growth path and reduce poverty. Last year atMonterrey a strong consensus emerged between developing and devel-oped countries on an approach to achieving the Millennium Develop-ment Goals. We all recognized that for developing countries, there is nosubstitute for sound economic and social policies. Moreover, there isconsensus that a strong commitment to good governance, includingstrong anticorruption measures, the protection of human rights, andrespect for the rule of law are key elements of good policy frameworks.In Canada, CIDA increasingly is underlining the importance of goodgovernance and the ability to use aid effectively in channeling incre-mental resources to poor countries.

Poverty Reduction Strategy Papers (PRSPs) are assuming evergreater importance in guiding national development strategies and inproviding frameworks for development cooperation. The MonterreyConsensus, however, also includes commitments from developed coun-tries in areas such as increased ODA, debt relief, and more effectivedevelopment assistance. In this respect, donors have committed toincrease aid volumes by US$16 billion annually by 2006. But developedcountries could improve aid effectiveness by aligning their developmentassistance with national priorities and by improving the coordinationand harmonization of their development activities with developingcountry partners and with each other.

A long-term goal is to help low-income countries grow more quicklyand reduce poverty to the point where they are relying predomi-nantly on private sources of financing. The Fund can help facilitate thisobjective through more intensified support in its traditional areas of

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macroeconomic competence, but there is also scope for the Fund towork more in conjunction with other development partners in areassuch as institution building and in encouraging greater developingcountry ownership of programs.

Voice and Participation

It has long been recognized that country ownership contributes tothe success of development programs. Similarly, more effective devel-oping country voice and participation in the Bank and Fund policydeliberations is critical to ensuring that programs take into account indi-vidual country circumstances and are realistic and sustainable. There isnow a strong consensus among Bank and Fund members that furthercapacity building measures are needed to enhance the voice of develop-ing and transition countries within the two institutions.

Steps have been taken to bolster both human and physical resourcesin developing country Executive Directors’ offices, but there are anumber of deficiencies that still need to be addressed. A recent pro-posal to establish a program to second mid-level African officials to theWorld Bank is worth closer study. Such a program, which in our viewshould be extended to developing country candidates beyond Africa,would provide strong benefits to sponsoring governments and theWorld Bank alike. Consideration might also be given at the Bank toenhancing the recruitment of young professional candidates from thedeveloping world. To improve the dialogue between Bank staff andcountry authorities, the Bank could institute further decentralization ofits country bureaus to the regions.

Trade

For many developing countries, trade is more important than devel-opment cooperation funding in generating the resources necessary toachieve the Millennium Development Goals. An equitable, open, andrules-based international trading system would enable developingcountries to tackle the root causes of poverty. Based on the Doha Dec-laration and the work that was achieved at Cancun, trade negotiationsneed to continue to ensure that developing countries are better inte-grated into the global trading system. We share the view that this canbest be achieved by making real progress on reform of agriculturaltrade.

We all need to demonstrate a more constructive approach to thetrade agenda. While furthering progress in agriculture and improvingmarket access for goods and services, we need to work harder to reachagreement on a range of provisions that ensure that trade reform

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benefits the poor in developing countries. We also need to bolster ourcollective effort to provide effective and targeted technical assistancefor building trade capacity in developing countries.

Both the Bank and Fund will continue to have an important role toplay in providing policy advice and in building this trading capacity.Moreover, trade issues need to be given greater prominence in Bankand Fund support programs in poorer developing countries.

Looking Forward

Looking ahead, Canada’s growth prospects are encouraging. Theprospects for the global economy are much brighter than in the spring,although major risks remain. A key challenge is to ensure solidmedium-term growth. The international financial institutions are wellpositioned to support stable growth and help low-income countriesachieve reductions in poverty. However, successful trade reform wouldhelp developing countries better integrate into the global economy andimprove prospects for poverty reduction.

CHINA: JIN RENQINGGovernor of the Bank

I am pleased to come to this zealous and hospitable country for theWorld Bank/International Monetary Fund Annual Meetings. At theoutset, I would like to express my sincere appreciation to the govern-ment and people of the United Arab Emirates for their thoughtfulpreparation and wonderful arrangement for the meetings. It is myhonor to join my colleagues from all over the world to discuss the issuesregarding development and prosperity of the world.

The world economy has started to pick up slowly since 2002, after aperiod of economic adjustment. Although geopolitical uncertainty andSARS in certain regions have affected, to some extent, the process ofthe world economic recovery, the positive development in some emerg-ing-market economies and countries with a strong global influence hascontributed to the gradual recovery of the world economy. It is encour-aging to note that a number of developing countries have achieved goodperformance in economic growth by continually implementing policyreforms and overcoming the difficulties posed by decelerating interna-tional capital inflows and an unfavorable external environment.

Nevertheless, we should also be aware of the fact that world eco-nomic development still lacks robust stimulus; the growth rate of theUnited States, Japan, and Europe remains low at the same time. Fur-thermore, the instability of international financial markets hasincreased. World trade growth tends to be slower, with increasing trade

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protectionism. In the long-term perspective, improved productivityresulted from technological innovation, and structural problems deeplyrooted in many countries have created excessive productivity capacityand an over-supply situation. The ensuing rising unemployment rateand heightened deflationary pressure have added further difficulties tothe world economic recovery and readjustment.

In the past year, the Chinese government continued to adopt proac-tive fiscal policy and appropriate monetary policy that have effectivelystimulated domestic demand. Despite the unfavorable external envi-ronment and quickly spread SARS, the Chinese economy has main-tained high growth. In the first half of 2003, China’s gross domesticproduct grew by 8.2 percent over the same period last year. The pro-jected target of 7 percent annual growth will be achieved.

Looking at the business cycle, the Chinese economy has entered anew growth stage. The intrinsic vitality of the economy has beenremarkably enhanced, and a number of new growth points are emerg-ing in areas such as automobiles, real estate, electronics, and telecom-munications. Meanwhile, private sector development has been boomingcontinuously, and spontaneous investment demand has been acceler-ated. On the other hand, China’s opening to the outside world hasentered a new phase marked by China’s accession into the World TradeOrganization, broadening the room for further economic growth.

In order to achieve the overall objective of maintaining stable eco-nomic growth, the government will continue to stimulate domesticdemand, ensure the continuity of macroeconomic policies, and pushforward reforms to address the structural problems of the economicsystem. Emphasis will be given to rural development, corporate andfinancial restructuring, and government-institution improvement. Thegovernment will take all possible measures to improve the quality andefficiency of economic performance and to maintain the economicdevelopment and social stability.

We take note of the concern about the Renminbi (RMB) exchangerate. The Chinese government has always held a serious and responsi-ble attitude about this issue. Since the eruption of the Asian financialcrisis in 1997, the stability of the RMB exchange rate has not onlyenhanced China’s economic and financial stability, but also con-tributed to financial and economic stability in the Asia region and theworld. A country’s foreign exchange regime should be determined byits economic development stage, its financial regulatory capacity, andthe solvency of enterprises. The market-based, single, managed float-ing exchange regime as adopted by China complies with China’s fun-damentals. In tandem with deepening financial reform, the Chinesegovernment will further improve the mechanism of the RMBexchange rate, prudently liberalize capital account, gradually relax

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constraints on using foreign currencies by firms and residents, andclosely monitor and adjust the balance of payments. We believe thatthe stability of the RMB exchange rate is conducive to stable eco-nomic and financial development not only in China but also in theregion and the world.

In the era of globalization, the role of the World Bank and the IMFin promoting sustainable economic development has been getting theattention of the whole world. We welcome discussion on such importantissues as implementing the Monterrey Consensus, enhancing the voiceand participation of developing and transition countries, opening upmarkets to developing countries, and promoting infrastructure develop-ment to accelerate poverty reduction. This is a good demonstration ofthe unique role that the Bank and the IMF have played by listening todeveloping countries and paying due attention to their needs.

The mandate of the Bank is to promote economic growth, reducepoverty by transferring real resources, and achieve equitable globaleconomic development. To meet these goals, the Bank should stick toits mainstream business by providing investment loans to client coun-tries and scale up efforts to support infrastructure development. In thisconnection, we welcome the Bank’s infrastructure action plan. We hopethat the plan will be translated into real action as soon as possible. Toensure the success of infrastructure projects, due attention should begiven to the balance of costs and benefits. The Bank should formulatepracticable and feasible safeguard policies that are based on the reali-ties of borrowing countries so as to effectively promote economicgrowth and poverty reduction.

The inadequacy of official development assistance (ODA) is a bighurdle in achieving the Millennium Development Goals (MDGs). Theshortage of funds has created a negative impact on the continuity ofpolicy reform and sustainability of economic growth in developingcountries. It is our view that the volume of development aid and thesequence and formality of aid flows should be in line with recipientcountries’ specific circumstances, such as development stage, povertyincidence, and structural adjustment agenda, which vary from countryto country. Developed countries should further increase developmentassistance to achieve the 0.7 percent UN target, which is critical toachieving the MDGs. We have noted that some countries have madeconstructive proposals with regard to implementation of the MonterreyConsensus. We hope that the High-Level Dialogue on Financing forDevelopment during the UN conference this year will come up withmore detailed and comprehensive initiatives to enhance the accounta-bility of all parties involved in implementing the Monterrey Consensus.Such initiatives should be progressive, selective, practicable, and meas-urable. It is our hope that the active participation of the World Bank

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and the IMF will lend an impetus to the international community inimplementing the Monterrey Consensus.

We welcome the role that the Bank and the IMF have played in pro-moting the Doha development round and in advocating a fair and openmultilateral trade system that addresses the needs of developing coun-tries. We attach great importance to the complementarity of increasingmarket access and providing additional development assistance. Thedeveloped countries’ reduction of trade barriers, especially in the areaof agriculture subsidies, holds the key to the success of the Doha devel-opment round. This reduction would be a concrete demonstration ofthe commitment the developed countries made in Monterrey. We regretthat the Cancun trade ministers’ meeting failed to result in an agree-ment. We hope that all parties will make concerted efforts to promotethe Doha development round. Developed countries, in particular,should take due responsibility to abandon trade protectionism, lowerbarriers, and further open up their markets so as to create a favorableexternal environment for developing countries. We hope that the newround of WTO negotiation will contribute to global development andpoverty reduction.

CROATIA: MATO CRKVENACGovernor of the Bank

It is my great honor and privilege to address the IMF and the WorldBank Annual Meetings in Dubai, UAE. I would like to express my grat-itude to our host for their warm hospitality and for their admirableorganization of these meetings.

Let me take this opportunity to pay tribute to both Bretton Woodsinstitutions for the manner in which they have handled the global devel-opment issues. I would like to congratulate Mr. James Wolfensohn andMr. Horst Köhler on their achievements over the past year and applaudthem for the many new initiatives. I am certain that they will be of greatbenefit to member countries, especially those in the developing world.

Over the past year, both institutions have clearly shown that theyadapt and implement their policies to the needs of a changing globaleconomy. In that context, we support the Bank and IMF in contributingto the fight against the financing of terrorism, as well as the fight againstmoney laundering through their surveillance activities.

We understand the Bank’s need for broadening its activities in orderto support stability and geopolitical security, as a necessary precondi-tion for sustainable development, and this should therefore remain anintegral part of the development agenda. We appreciate the Bank’scooperative approach with other key actors given the complex political,social, economic, and international dimension of the global adjustment

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process. There is room to strengthen its post-conflict policy perform-ance within its scope of work.

Further enhancing the ownership of client countries and greaterinvolvement of developing and transition countries in the Bank’s opera-tions, especially in the CAS process, is of a great importance. We wel-come the spirit of shared responsibility and mutual accountability inachieving the Millennium Development Goals (MDGs) and supportthe idea of adopting concrete monitoring measures to ensure thatdevelopment partners deliver on their promises. Although the financialroles of both institutions remain indispensable, we see the great value oftechnical assistance (TA) as being essential to continue reforms byimproving economic policies and strengthening public institutions.

The subject of enhancing the voice and participation of developingand transition countries is rather challenging and not simple. The pro-posal to set up an independent expert task force to deal with the issues ofthe voting and capital structure of the Bank seems to be a reasonable one.The mixed country constituencies, consisting of both borrower and donorcountries have advantages. There is a question of their adequate propor-tion in order to fully promote the interests of both groups of countries. Asregarding the idea of establishing a trust fund to support research andpolicy advice in EDs’ offices, besides the issues of raising funds (con-tributing with adequate resources), the over reliance on developed coun-try researchers and advisers also could be elaborated further.

We encourage activities on the decentralization as well as enhancingtransparency of both institutions. Let me say that Croatia publishesArticle IV reports as well as program documents, and we welcome therecent IMF Board decision to move towards presumed publication ofcountry reports. These reports are a useful source of information for thebanking and business community and could serve the purpose ofmaking economic and financial risk assessment available for each indi-vidual country and not only the regional risk context.

Turning to Croatia, allow me to present some recent activities andachievements.

The Stabilization and Association Agreement (SAA) with the EUsigned in May 2002, strongly emphasizes the individual country achieve-ments and depends on the regional cooperation, which we strongly wel-come. In that respect we have made significant progress with regard topolitical stabilization and fostering economic ties with neighboringcountries. In March this year, Croatia officially applied for accession tothe EU, and we are looking forward to its future development as aprocess of integration in the European Union. Our overall achievementsso far are giving us reason to believe that by the end of 2007 we will ful-fill all conditions required by the EU from its potential new membercountries. As a WTO and CEFTA member, Croatia has opened its

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borders to potential partners from the region and all over the world. Webelieve Europe to be a unique association having a great advantage ininternational relations. Becoming a part of such an association will be abenefit for the union that we have always considered as our homeland.Furthermore, we have significantly improved our relationship withNATO through the Partnership for Peace Program, which we believe tobe one of the major contributions for the successful development of sta-bility and peace in the region.

Lastly, let me say a few sentences about the macroeconomic situa-tion and trends in the Croatian economy. In spite of the generally weaklevel of economic activity in the major EU member countries, Croatiacontinues to achieve positive results and provides proof of a goodmacroeconomic performance of the Croatian economy in the course ofthe last several years. Real GDP growth was 5 percent (as projected)mainly due to the increase of industrial production and infrastructureinvestments, as well as tourist-sector activities. Unemployment is stillhigh but is constantly decreasing. We expect that macroeconomic poli-cies would remain adequate and supportive for further structuralreforms to strengthen economic growth on a sustainable basis.

For the first half of this year inflation was 0.9 percent, while at theend of last year 2.3 percent was recorded. Inflation was lower and inter-national reserves reached a larger level than originally programmed.Fiscal targets were materialized with a further reduction of the deficit ofthe consolidated central government from 5.4 percent of GDP in 2001to 4.25 percent of GDP in 2002. Fiscal consolidation remains a priorityin order to enhance stable and sustainable growth.

Finally, we are interested to develop further our relations with theBank and the Fund as a continuation of traditionally good cooperationusing all possibilities that those institutions offer for sustainable devel-opment and a better living standard for the Croatian population. Mr.Chairman, let me assure you that Croatia will continue to pursue thedevelopment of a close and beneficial cooperation with the Bank in thefuture.

Ladies and gentlemen, thank you for your kind attention.

CYPRUS: MARKOS KYPRIANOUGovernor of the Bank

It is an honor to submit a statement to the 2003 Annual Meetings ofthe Governors of the International Monetary Fund and the World BankGroup. Although this statement addresses global economic and finan-cial issues, it is made from the perspective of a small open economy thatwill accede to the European Union (EU) in May 2004 and that aims toparticipate in the European Monetary Union as soon as possible.

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Although there is now some evidence of a recovery in the worldeconomy, the global economic environment has remained unfavorablefor Cyprus and other small open economies. Output in the main Euro-pean trading partners is stagnant, and the threat of international terror-ism compounds negative effects on the export of tourism services inparticular. More generally, it could be said that the small openeconomies, which are heavily dependent on air travel, have beenaffected more harshly by the adverse international environment of thelast two years.

To contain the negative effects emanating from the fall in tourism,the government of Cyprus adopted a more expansionary fiscal stanceand has managed to keep the economy growing at an annual rate ofaround 2 percent. However, the stimulating of government expenditurecomes at a time when cyclically determined tax revenues are subduedand EU harmonization and structural reform costs are mounting. Inaccordance with this fiscal policy stance, Cyprus, along with many otherEuropean countries, is finding EU fiscal rules, including the conver-gence criteria established for government deficits and public debt underthe Maastricht Treaty, more demanding.

In addition to the great effort that has been made to contain govern-ment expenditure in the forthcoming budget for 2004, a sustained andstrong recovery in global output and world trade would help consider-ably in reviving growth and correcting the imbalances in the Cyprioteconomy. Indeed, fiscal consolidation constitutes the backbone of the2003 Pre-Accession Economic Programme of Cyprus, which is premisedon the recovery of the annual growth rate of the Cypriot economy to itspotential of 4.5 percent over the medium term.

In the current international environment of sluggish economicgrowth and trade, there is a tendency by certain countries and regionalgroups to attempt to maintain and even enhance their market shares bykeeping their currencies undervalued and resorting to protective trademeasures. However, such practices and behavior will only distort worldtrade and keep its growth below that of output. Cyprus welcomes theefforts of the World Trade Organization, the World Bank, and the Inter-national Monetary Fund to encourage advanced economies to phase outtrade-distorting policies so as to ensure that commitments to free trademade in Doha in November 2001 are implemented on schedule by 2004.

In terms of policies of the international community to assist with sig-nificant poverty reduction in the poorest countries through the Monter-rey Consensus, there is concern that the momentum built up 12 monthsago to bring about the effective delivery of the Consensus seems to belosing steam. There is an immediate need for donors to fulfill theirMonterrey commitments on large increases in aid and to pursue pro-posals for new financing facilities and modalities so as to help meet the

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Millennium Development Goals (MDGs). In terms of the policies andefforts of the international community and developing countries toachieve the MDGs, the World Bank’s World Development Report 2004is particularly illuminating, especially in its central theme of how tomake services work for poor people. Indeed, the process of providingdevelopment assistance should be directed toward making developingcountries ultimately dependent on their own resources and infrastruc-ture to generate and to sustain healthy economy growth.

But what also is an essential pre-requisite for promoting sustaineddevelopment is the establishment of conditions of peace and security.The awful experiences of countries such as Afghanistan, Iraq, andLiberia demonstrate that conditions of stability and public order mustbe restored to support any sustainable reconstruction process. Interna-tional efforts must be taken to prevent post-conflict countries fromreverting to instability and violent conflict, so that all developing coun-tries have conditions of peace and security vital for sharing in the globaldevelopment process.

Finally, it can be stated that Cyprus benefits both directly and indi-rectly from the IMF’s surveillance activities. The Fund’s Article IV con-sultation reports provide an invaluable input into the analysis ofeconomic developments and prospects and the assessment of our policies.Although IMF surveillance helps in averting international financialcrises, there are areas in which this surveillance can be improved. In thisconnection, trade liberalization comprises an important element of crisisprevention and resolution. Accordingly, we support the intention of theFund in its Article IV reports to provide an assessment of the degree towhich countries observe open trade regimes.

Furthermore, Cyprus strongly backs the international fight againstmoney laundering and the fight against the financing of terrorism. Itsupports the efforts of the IMF and the World Bank in contributing tothis fight through their surveillance activities and technical assistance, incollaboration with the Financial Action Task Force (FATF) and FATF-style regional bodies.

FIJI: J. Y. KUBUABOLAGovernor of the Bank

It is a great honor for me to address the Board of Governors of theInternational Monetary Fund and the World Bank Group at the fifty-eighth joint Annual Meetings. I would also like to express, on behalf ofmy delegation, our sincere appreciation to the host, Dubai, as well asthe government of the United Arab Emirates, for their warm hospital-ity and the excellent arrangements made for this meeting. I also con-gratulate you, Mr. Chairman, in chairing the meetings this year.

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There have been many serious developments on the internationalfront since we last met in Washington. The war in Iraq has ended, butthe world continues to face the huge challenge of reconstructing thecountry’s economic, social, and political systems. The search for lastingsolutions to the threat of terrorism continues. This year, the outbreak ofthe deadly SARS virus affected the South East Asian region severelyand, by extension, some of our economies that have trade relations withthe Asian countries affected.

We live in uncertain and volatile times. This fragile environmentdepresses world growth and makes the future very unpredictable. Whilethe IMF has forecast an improved outlook for the world economy, weare concerned with the uneven and low growth among developed coun-tries. We are even more concerned that this climate makes it extremelydifficult for developing members of the Bretton Woods institutions tofind lasting solutions to their economic problems. As the global villagebecomes smaller, the ramifications of international developments thatwe have seen in the last 12 months are rapidly transmitted to all parts ofthe globe.

We in Fiji, a small island economy in the middle of the large PacificOcean, are not immune from these developments. The impact of SARSand the war in Iraq affected our tourism sector, the largest industry in ourcountry. Furthermore, these adverse developments complicate the highlevel of vulnerability that we already face from our small size, remotelocation, scarce resources, and very thin and undeveloped markets.

Nevertheless, we are making our contribution to efforts to deal withthese global challenges. Fiji has made a lot of progress to countermoney laundering and terrorist financing. This year, we are concentrat-ing on implementing the recommendations from the Asia Pacific Groupon Money Laundering Mutual Evaluation Exercise that was carried outlast year. Recently, we established an interim Financial IntelligenceUnit to strengthen our surveillance and monitoring of suspicious finan-cial transactions. The unit will be formally established after passage ofappropriate laws, which were drafted through International MonetaryFund technical assistance.

At the same time Fiji is doing all it can to comply with internationalcodes and standards even with the scarce resources that we have. Lastyear, we participated in an IMF review of Code of Good Practices onFiscal Transparency. In August this year, we have completed a Reporton Observance of Standards and Codes (ROSC) conducted by the IMF,to evaluate Fiji’s compliance with the Codes of Transparency in Mone-tary and Financial Policies. Fiji has also scheduled to have a FinancialSector Assessment Program (FSAP) within the next two years. Theseassessments, which we agreed to do voluntarily, reflect Fiji’s commit-ment to transparency and to promoting good governance in all areas of

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the country’s policy development and decision-making processes. How-ever, these procedures should remain voluntary, and I urge the Fund notto make the ROSC and FSAP conditions of its assistance to membercountries.

With a population of less than one million people, Fiji has limitedmanpower and technological capacity, and we must be given the timeand the resources to deal with compliance with international codes,which are increasing in both number and complexity. Our limited capac-ity to handle this task is exacerbated by the continued loss of our skilledand trained human resources to other countries. The direct and indirectcost of this brain drain is enormous to our small island economy. It seri-ously affects our productivity and our ability to compete in the worldmarketplace. The need for more training is paramount, and we call forassistance from our bilateral partners and multilateral institutions tohelp us address this pressing national issue. At the same time, werequest more coordination and sharing of information among multilat-eral and donor agencies. This will lighten our load in providing data andminimize repetitive consultations with individual donors and agencies.

Let me provide an update on the political and economic develop-ments in Fiji. The country returned to full parliamentary democracyafter the general elections in 2001. Political stability is fully restored inFiji. As a reflection of the political calm, I am glad to report that theFiji’s economy continues to forge ahead, registering consecutive growthsince 2001. Economic growth this year is forecast at around 5 percent.For the next two years, we expect growth to be close to 4 percent. Oureconomic fundamentals are supportive of future growth with inflationlow, foreign reserves at adequate levels, and government debt moder-ate. Business confidence is growing.

Like many developing countries, Fiji needs to attract investment tocontinue to maintain growth levels adequate to support employment ofour people. While investment is still relatively low at 13 percent of grossdomestic product (GDP), we are encouraged by the pick-up in the last12 months, and we are confident that we will achieve our target of25 percent of GDP in the medium term. We are at the same time under-taking reforms in the public service and public enterprise sector thatwill improve our operational efficiencies and raise the productivity ofinvestment in Fiji. With this combination, together with macroeconomicstability, we are hopeful that Fiji will lift its medium-term growth rate toaround 5 percent per annum.

I wish to make several comments on some issues concerning theBretton Woods institutions.

First, Fiji firmly supports the early start on the thirteenth review ofthe IMF quotas. While I fully appreciate the need to link the review tothe adequacy of the Fund’s resources, I am also convinced that the

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review is still useful in examining the roles of IMF quotas in the gover-nance of the Fund and in eliminating the existing misalignments inmembers’ allocation.

Second, the Monterrey Consensus and the Doha Declaration haveset out the principles and mutual responsibilities that will enable theinternational community to wage an effective war against globalpoverty. Increased trade opportunities provide the best means of com-bating poverty in developing countries. I, like others, regret the failureof the Cancun round of trade negotiations. I support the call by theInternational Monetary Fund and the World Bank on the World TradeOrganization (WTO) for a quick resumption of trade negotiations. Thissentiment was echoed by the International Monetary and FinancialCommittee and the Development Committee. In my view, it is impor-tant that we promote a spirit of partnership in trade negotiations, andthe WTO must ensure that the interests of both the developed anddeveloping countries are taken into account during negotiations. Tocomplement these efforts, the Bank must move forward and adaptexisting tools and design new programs that will provide resources todeveloping countries to reform their trade regimes, strengthen trade-related institutions, and boost investment in infrastructure.

Third, I urge the Bank and the Fund to increase and sharpen theirefforts to assist developing countries, including small island states, takeadvantage of the opportunities and meet the challenges arising fromglobalization. In my view, the Bretton Woods institutions can only beeffective development partners if their operations and assistance arebased on sound knowledge of developing countries and their develop-ment challenges. In this regard, I wish to underscore the importance ofensuring that the Poverty Reduction Strategy Papers (PRSPs) andPoverty Reduction Growth Facility (PRGF) are genuinely country-owned and that financial support, including aid, is provided by develop-ment partners on a sufficient scale and in a predictable manner. Inaddition, I urge the World Bank to simplify its loan conditions and pro-cedures. On the issue of enhancing the voice and participation of devel-oping countries in the decision-making process of the Fund and theBank, in my view, the immediate step is to enhance the capacity of exec-utive directors’ offices in both the Fund and the Bank. Furthermore, theBank would need to strengthen its in-country capacity building throughlocal and global development learning networks and further decentral-ize its operations with the ultimate goal of responding to the needs ofmembers effectively.

Fiji has benefited greatly in the past from the assistance of the IMFand the World Bank. To conclude, I would, therefore, like to thank theInternational Monetary Fund and the World Bank for technical assis-tance provided over the years to Fiji and to acknowledge the work done

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by the IMF Pacific Financial Technical Assistance Centre (PFTAC) inSuva and the World Bank Pacific Regional Office in Sydney. I look for-ward to the continued support of the two institutions over the next year.

FRANCE: JEAN-CLAUDE TRICHETAlternate Governor of the Fund

We are meeting today as the recovery of the world economy is pro-gressively under way. However, this recovery remains fragile, imbal-ances have not vanished, some emerging countries are still facingserious difficulties, and geopolitical uncertainties remain, in spite of theend of the war in Iraq.

In this context, the international community should pursue itsefforts to strengthen crisis prevention and resolution. Moreover, devel-oped countries should remain determined to promote a strategy of sus-tainable development for the benefit of all.

Recovery is under way, but imbalances persist.

Prospects for a recovery are today more favorable than during ourprevious meeting last spring. Receding geopolitical tensions and improv-ing market conditions have largely contributed to this improvement.

However, returning to a strong and sustainable growth path meanstackling persistent imbalances in a decisive manner.

Against this background, the increase in the deficit of the currentaccount of the most industrialized countries is, on the whole, a source ofconcern because it implies that the richest countries are absorbing agrowing portion of the savings of the rest of the world.

Reabsorbing these imbalances is essential. It calls for an in-depthaction. Structural reforms should be one of the top priorities in industri-alized, emerging, and transition countries. It will contribute to strength-ening the growth potential of the world economy, which is alsoconditioned by sustainable fiscal policies in the medium term.

The international community should maintain its efforts aimed atimproving prevention and resolution of financial crises.

First, let me highlight the essential contributions of the IndependentEvaluation Office of the International Monetary Fund (IMF) policies.The recommendations of the first three reports have already resulted ina fruitful exchange of views and in concrete operational progress. Thiswork should continue to contribute to our collective reflection and toimprove the functioning and efficiency of the Fund.

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Let me raise three issues.First, strengthening surveillance and crisis prevention is a priority.

Since the Asian crisis, the IMF has allocated significant resources toreinforce the crisis prevention framework. The work undertaken inrecent months to improve surveillance tools is encouraging. It hasinduced a clarification of the objectives and the scope of IMF surveil-lance and an improvement in its modalities.

Additional progress is possible in various areas: analyzing public andexternal debt sustainability, identifying vulnerabilities of emergingcountries, developing a balance-sheet approach, and monitoring thestability of the financial sector.

That being said, I welcome the IMF’s new orientation of the Reporton Observance of Standards and Codes/Financial Sector AssessmentProgram (ROSC/FASP) process toward greater realism and efficiency.

Concerning surveillance in program countries, we should aim at agreater operational autonomy of surveillance, so as to benefit from a freshperspective. However, it should not lead to an institutional separation.

Better crisis prevention calls for greater transparency. I welcome therecent agreement on presumption of publication of Article IV reportsand financing programs, and the enhanced provisions for exceptionalaccess.

Second, we should continue our efforts to design and develop instru-ments for debt restructuring.

The increasing inclusion of collective action clauses in internationalbonds, since the publication of the Group of 10 report in March 2003,represents an important step forward. I welcome the heightened open-mindedness of issuers and market participants to this development.

Furthermore, I believe that it would be useful to continue reflectingon a code of conduct that would permit issuers, the private sector, andthe international community to improve predictability, notably in diffi-cult situations or crises. I encourage the issuers and the private sector towork informally under the aegis of the Group of 20.

These efforts, of course, are not substitutes for other work on crisisresolution, such as transparency, aggregation, and inter-creditor equity,which should remain on the IMF agenda.

Third, I would like to underscore that increased transparency andbetter governance are, in my view, a necessary condition for a smoothfunctioning of the international financial sector.

In this context, I welcome the revision of the Financial Action TaskForce (FATF) 40 recommendations on the fight against money launder-ing, which were finalized at the Berlin meeting last June. The agree-ment by many countries to support the eight special recommendationson terrorism financing is also encouraging.

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I welcome progress achieved in the pilot program of assessments inthese fields, led jointly by the IMF, the World Bank, and the FATF. Thewidening of the scope of assessment to law enforcement issues is neces-sary, although we have to carefully assess implications in terms ofhuman and financial resources.

We should forcefully promote sustainable development and a reduction in poverty throughout the world

In 2002, the Monterrey and Johannesburg summits provided theopportunity for industrialized countries to reaffirm their solidarity withdeveloping countries. France is fully involved in this effort. I recall thatthe president of the French Republic announced in Johannesburg anincrease in official development assistance (ODA), which will reach0.5 percent of gross domestic product (GDP) in 2007, then 0.7 percentof GDP in 2012. The French government is open to new ideas to signif-icantly raise ODA, in particular the initiative of an international financ-ing facility.

The international community, as a whole, should find solutions tosmoothly conciliate globalization and growth. Exports from developingcountries should have greater access to markets of developed countries.A better integration of the poorest countries into international traderequires the creation of mechanisms to compensate for the short-termnegative impact of trade openness. These challenges call for a perma-nent and exigent dialogue.

In this context, the failure of the Cancun discussions is disappoint-ing. However, it should not impede progress toward the Doha objec-tives. We still hope that an agreement might be reached before the endof 2004.

The Bretton Woods Institutions should strive to fully implement theHeavily Indebted Poor Countries (HIPC) Initiative. I regret that a stillinsufficient number of countries have reached the decision point andthe completion point.

France supports a more generous methodology for the calculation ofthe additional debt reduction at completion point (the so-called “topping-up”).

Given the remaining divergences on this issue, we call on interna-tional financial institutions to work on a proposal that would link topping-up and governance, so as to combine generosity, selectivity, and efficiencyof the aid provided.

Finally, I strongly believe that the Facility for Poverty Reductionand Growth should be fully funded in the medium term.

Returning to a sustainable growth path requires that we decisivelyimplement the structural reforms needed for our economies. I reaffirm

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my trust in the Bretton Woods institutions and in particular in theirmanaging director and president, Horst Köhler and Jim Wolfensohn,respectively, to continue to remarkably manage their institutions.

GERMANY: ERNST WELTEKEGovernor of the Fund

I am pleased that the International Monetary Fund (IMF) and theWorld Bank are holding their annual meetings in the United Arab Emi-rates this year. For the first time, these meetings are being hosted by acountry in this region.

I am sure that the IMF and the World Bank have made an excel-lent choice in selecting Dubai as the venue. I thank the United ArabEmirates for their warm hospitality and their splendid organizationalperformance.

The economic situation in many parts of the world has improved.The IMF’s latest forecasts indicate that an upswing is under way.Although we broadly share this view, we see, however, a number ofrisks.

In this context, I wish to mention three problems. First, there arewidespread concerns that the large current account deficits and sur-pluses are not sustainable. Reducing trade restrictions and internalimbalances would mitigate the risk of disorderly exchange rate adjust-ments. However, measures distorting exchange rates, trade, or capitalmovements are counterproductive. Global economic problems requiremultilateral resolutions.

Second, despite some progress in consolidating government budg-ets, the risks associated with large budget deficits have by no meansbeen averted: this is not least reflected in the recent rise in long-terminterest rates. Therefore, fiscal consolidation must be continued. This isa particular challenge in periods of insufficient growth. A medium-termfiscal framework could help to overcome these problems.

Third, monetary policymakers are currently facing an unfamiliar sit-uation: both inflation rates and nominal interest rates have been at theirlowest level in decades. At the same time, there is ample liquidity, whichis still growing. New bubbles must be avoided. Therefore, central banksmust remain vigilant. As a central bank governor, I am particularly keenon making that point.

Despite these risks, the economic upswing will broaden and gainstrength. This will provide an opportunity that must be seized to fullyimplement the ongoing reforms. We all know that reforms may bepainful in the short run. However, they provide the basis for highergrowth in the long term for the benefit of all.

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We have to make sure that the economic upswing stabilizes andbroadens in a sound financial environment. The IMF and the WorldBank have an important role to play with regard to crisis preventionand crisis resolution.

I welcome the progress made in this area:

• The IMF’s surveillance will be further strengthened.• Transparency will be enhanced.• More and more countries are realizing the benefits of the Financial

Sector Assessment Program.• The rules governing access to the Fund’s financial resources in capital

account crises have been strengthened.

Going forward, the focus should be on implementing these measures.The World Bank and the developing countries are facing major chal-

lenges too. First, the Doha round. I find it inappropriate that industrialcountries spend hundreds of billions of dollars each year to protect theirown products. These subsidies are several times larger than the amountof development assistance. This makes it difficult to exploit the virtuesof globalization for the benefit of all. It would be extremely unfortunateif the failure of the Cancun negotiations led to trade conflicts. Again,there is no reasonable alternative to the multilateral approach.

Second, the Millennium Development Goals, reaffirmed at Monter-rey, are a guideline for German policy. Achieving these goals requiresjoint efforts. Well-targeted financial aid to developing countries can onlybe successful if combined with good governance and sound institutions.

Last but not least, a remark on quotas and voting rights. I know thatmany countries are seeking higher voting shares. Yet proper functioningof the IMF and the World Bank as financial institutions requires that astrong link be maintained between member countries’ quota shares andthe countries’ capacity to contribute to the financial resources asreflected by each country’s economic weight. However, I believe there iscertainly some justification for an increase in basic votes.

GREECE: NIKOLAOS CHRISTODOULAKISGovernor of the Bank

This year’s annual meetings are of some special historical signifi-cance, because they are the first to take place in the Middle East. Iwould like to congratulate the authorities of our host country for theexcellent organization of the meetings, for the impressive facilities theyhave put at our disposal, and for their outstanding hospitality. I wishthem success in their efforts to develop Dubai as a leading internationaltrade and financial center and to promote the prosperity of its people.

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I will touch briefly on four topics. First, I will review global eco-nomic prospects and the significant policy challenges that we need col-lectively to address. Second, I will offer a few comments on our ongoingefforts to strengthen the international financial architecture. Third, Iwill discuss the critical role that the International Monetary Fund (IMF)and the Bank can play in helping low-income countries combat poverty,promote economic development, and reach the Millennium Develop-ment Goals. Finally, I will brief you on the economic developments andprospects of my own country, Greece.

Global Economic Prospects and Policy Challenges

The global economy appears now to be emerging from a long anddifficult period of subdued economic activity. This is encouraging newsto all of us and especially so to our colleagues in Latin America, Asia,and other regions that have been confronted in recent years with devas-tating economic crises. But as both the managing director of the IMFand the president of the World Bank reminded us this morning, therecovery remains fragile.

Economic activity is expected to recover in the second half of 2003and gather momentum in 2004. The easing of geopolitical risks, theimproved financial market conditions, and accommodative macroeco-nomic policies in most major economies make the environment moreconducive to growth. However, we are still facing some difficult chal-lenges. We have to support an orderly correction of current account andfiscal imbalances—in such a way that growth prospects are notimpaired, but also through smooth and regionally balanced exchangerate adjustments that reflect fundamentals. It is our view that exchangerate regimes (which are increasingly perceived as unsustainable),excessive current account imbalances, and related changes in levels offoreign exchange reserves should be avoided, and adjustments inexchange rates should be orderly, gradual, and fairly shared. Further-more, we have to support and consolidate a sustainable recovery overthe short and medium terms through sound macroeconomic and struc-tural policies.

The Euro area has been adversely affected by global economicdevelopments and structural weaknesses. The recovery, which shouldstart in the course of the second half of this year, is expected to gradu-ally gather momentum. The protracted period of slow growth has led toa deterioration in fiscal position and employment. However, severalindicators already point to an improvement. The easing of geopoliticaltensions should be helpful. Lower and stable oil prices would also con-tribute to the global and Euro area recovery. The current monetary

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policy stance in the Euro area is supportive of economic activity andhelps safeguard against downside risks to economic growth. Also,important steps have been taken in terms of structural reforms to fosterflexibility and raise the growth potential of our economies.

Fiscal policy has also been accommodative. Automatic stabilizershave to a large extent operated, cushioning the slowdown in economicactivity. This is expected to continue, within the framework of the Sta-bility and Growth Pact. The longer-term sustainability of publicfinances is also a policy priority as part of our strategy to meet the chal-lenges of ageing populations.

The International Financial Architecture

We welcome the progress made by the Fund to improve crisis pre-vention. The Fund should pursue its efforts to improve the surveillanceframework. Progress in implementing international standards andcodes is encouraging. However, the effort to enhance transparencyshould be further increased to enable market participants to better takeinto account the results of the actions undertaken. We also welcome thepresumption of publication of Article IV reports, PINs, and programapproval and review reports, starting July 1, 2004, as well as the sugges-tion for the managing director not to recommend an approval of a pro-gram or the completion of a review in exceptional access cases, unlessthe authorities concerned consent to the publication of the relevantstaff report.

It is also important to strengthen work on improving crisis resolution.In particular, it will be crucial to ensure that the IMF’s exceptional accesspolicy is strictly implemented. We are encouraged by the progressachieved so far on the use of collective action clauses (CACs) in interna-tional sovereign bonds. We welcome the discussions that have takenplace between the private and official sectors on developing a code ofconduct for creditor-debtor relations. However, further substantial workon developing a sovereign debt restructuring mechanism is also needed.

The Role of the Fund and the Bank in Low-Income Countries

Since its launch, the enhanced Heavily Indebted Poor Countries(HIPC) Initiative has achieved substantial progress. However, the fullfinancing of the initiative still needs to be secured, in spite of progressachieved in the financing of the HIPC Trust Fund. The European Union(EU) has provided more than half of the financing of the HIPC Initia-tive. In addition, all EU countries have announced their intention to gobeyond HIPC targets by providing officially 100 percent bilateral pre-COD debt relief for all claims on HIPC countries. The IMF and the

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World Bank should regularly report, including in the Article IV surveil-lance report, the compliance of their member countries with the HIPCcommitments.

We endorse the revised 40 recommendations on money launderingapproved by the Financial Action Task Force (FATF) at its Berlin meet-ing. The recommendations provide a renewed and strong internationalbase to combat the abuse of the financial system. We have to complyquickly with this revised standard, in part through transposition andimplementation of the second EU anti-money laundering directive.

It is encouraging that a large number of countries worldwide havechosen to endorse the eight FATF special recommendations on terroristfinancing. We commend the IMF and the World Bank for their exten-sive work in this area.

Economic Developments and Prospects in Greece

Let me now refer to recent economic developments in Greece.Despite the economic slowdown in the Euro area, the performance ofthe Greek economy remains satisfactory. This performance is expectedto continue in the future, leading to real convergence toward the EUaverage. Greek gross domestic product (GDP) has been rising fasterthan the EU average since 1996. In 2003, Greece is expected to achievea growth rate of about 4 percent, which is the highest in the EuropeanUnion. An encouraging development is that exports have started togrow despite the weakness of external demand, indicating that pastinvestments are starting to pay dividends and that Greece’s competi-tiveness and long-term prospects are improving. Helped by this healthyrate of growth, unemployment fell below 9 percent in the second quar-ter of this year and is expected to continue its downward trend. Theinflation rate also eased, from relatively high levels, in recent monthsand is expected to move closer to the Euro zone’s average in 2004.

The Greek government is fully committed to upholding the EU’sStability and Growth Pact. In 2003 the general government deficit isexpected to be contained at slightly above 1 percent of GDP, despite thehigh costs of preparing for next year’s Olympic games. Further consoli-dation is planned to ensure that the ratio of public debt to GDP remainson a sustainable downward trend.

The overall improvement of the fiscal situation, together with thefast rate of growth of the economy, has allowed the government tolaunch an ambitious program of real convergence. This program (the“convergence charter”) builds on and further invigorates the ongoingprocess of structural reforms. Main priorities include the energy andtourism sectors. The convergence charter is in line with the country’scommitments to the European Union under the Lisbon Agenda and

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aims to bring economic efficiency and living standards closer to the EUaverage. The main policy instruments to achieve these goals are:

• the control of public expenditures;• further privatizations and efforts to form strategic partnerships

between big utilities and foreign companies;• the lowering of tax-induced distortions; and• the promotion of labor mobility and adaptability so as to facilitate

employment creation.

It is our conviction that high growth rates cannot be sustained forlong if all citizens do not share in their benefits. A more equitable dis-tribution of incomes is not only a social desideratum, but also a prereq-uisite for the growth process itself. We are committed to allocate moreresources to education, as defense spending is reduced as a percent ofGDP, from a formidable 4.5 percent today to about 3 percent over thenext five years.

In a world of global markets and rapid technological change, thereare more and new linkages among economies, and interdependenceincreases. That is why we believe that increased globalization requires areinforced international cooperation aimed at preventing or resolvingcrises as well as promoting policies favoring financial stability, techno-logical innovation, and the more equitable distribution of the gainsfrom growth, both among but also within countries.

GUYANA: SAISNARINE KOWLESSARGovernor of the Bank

(on behalf of the Joint Caribbean Group)

I am honored to speak on behalf of the member states of theCaribbean community. I would also like to join my colleagues in express-ing appreciation to our host, the United Arab Emirates, for the gracioushospitality that they have extended, and to the management and staff ofthe Bank and Fund for the excellent arrangements put in place for thesemeetings. Members of the Commonwealth Caribbean attach special sig-nificance to these meetings, which are being held in the Middle East forthe first time. That we should meet in Dubai demonstrates the importantrole that small states can play in guiding the process of global integrationand forging real partnerships in pursuit of our common goals.

Global Environment

The uncertainty facing the world economy and the likely implica-tions for developing countries’ economic performance continue to be of

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concern to the Caribbean. The recovery underway remains fragile, andwhile we acknowledge the improved growth prospects for 2004, ouroptimism is constrained by a number of downside risks from geopoliti-cal shocks and structural weaknesses in some developed economies,which could further dampen global growth. Small economies like thosein the Caribbean, whose economic performance is closely linked todevelopments in the global economy, are further challenged by theuncertainties, which come at a time when we are intensively undertak-ing structural reforms with limited financial resources.

Trade

If we are to meet the Millennium Development Goals (MDGs) andpromote sustained improvement in the economic welfare of our citizens,we must achieve real progress on the Doha Development Agenda.Therefore, we must redouble efforts within the multilateral framework toensure that the agenda is put back on track following the adjournment ofthe fifth Ministerial Meeting of the WTO in Cancun without agreement.

We welcome the increased focus on trade by the Bank and the Fundand their advocacy role in highlighting the importance of making mean-ingful progress on market access, particularly in textiles and agriculture,the elimination of subsidies, and reducing barriers to developing coun-try exports. At the same time, our institutions must recognize the vary-ing impact of the liberalization process on members, and tailorresponses to country circumstances appropriately. Among the issues forattention are: the impact on tariff revenues; the losses due to the ero-sion of preferences, in particular, the effect of the removal of quotarestrictions in agriculture through multilateral liberalization; the impactof reforms on the poor; and the effect of migration.

We also urge that reforms to remove obstacles to growth andstrengthen the resilience of our economies be well sequenced, withappropriate transitional safeguards in place to protect the most vulner-able from an overly rapid transition to a system of liberalized trade.Adequate technical assistance should be made available to develop theinstitutional capacity to implement WTO agreements and to deal withtechnical barriers to trade.

Finally, as was reflected in the work done by the World Bank and theCommonwealth Secretariat on small states, and is currently beingdemonstrated in ongoing FTAA and WTO negotiations, very small coun-tries face special operational and other constraints, and equitable treat-ment of these countries in the world economy is not always obtained bytreating all countries equally. In this regard, the institutions need to workclosely to support arguments for special and differential treatment in

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trade negotiations, given the constraints identified in the Small Statesreport, as well as to support the right to fiscal sovereignty.

Debt Relief

Debt relief for Heavily Indebted Poor Countries (HIPC) shouldremain a priority if the cause of poverty reduction is to be truly served.In particular, prompt interim assistance should continue to be deliveredto countries in the initiative. Most importantly, eligibility criteria must beapplied and measured consistently and objectively so that countries canreach their completion point in a timely manner. Finally, appropriateassistance should be in place to ensure that countries exiting the pro-gram maintain sustainable debt levels into the medium and long term.

Resource Mobilization

We welcome reports from the OECD Development Assistance Com-mittee (DAC) that Official Development Assistance (ODA) increasedby 4.9 percent in real terms in 2002. We acknowledge, especially, theefforts of those countries that have managed to achieve ODA levelsabove the UN target of 0.7 percent of GNI. That said, however, signifi-cant, timely, and more predictable financing is still needed over andabove the current levels if progress is to be made towards the MDGs.

Middle-income countries in the Caribbean still face significantfinancing needs, particularly in light of declining and uneven privateflows. Regional economies are being challenged to maintain sustainablefiscal balances because contributions from services exports like tourism,are still not generating sufficient growth to improve government rev-enues. Expanding productive capacity and the structural transformationof some economies, particularly in some agriculturally based economiesof the Eastern Caribbean, call for relatively large investments.

The medium-term solution will require more involvement by themultilateral organizations, in particular, the World Bank, to supportcountries’ efforts to boost productive capacity for export of goods andservices. We urge the Bank, in particular, to design more innovativeinstruments to meet the long-term financing needs for tourism, infra-structure, transportation, and agriculture.

Anti-Money Laundering and Combating the Financing of Terrorism

Our region is fully committed to its partnership with the internationalcommunity in the effort to counter the use of our financial systems bycriminals and to combat the financing of terrorism. The developmentand implementation of appropriate programs remain high on the regional

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agenda but can place severe demands on our small economies and lim-ited resources. In this context, we acknowledge and welcome the col-laborative work of the Bank and Fund with member countries in theCaribbean. While our countries embrace the challenge of bringing theregional financial services sector into full compliance with internationalstandards, we believe these standards should be developed in consultationwith and applied fairly and equitably to all countries.

Caribbean Regional Technical Assistance Center (CARTAC)

We welcome the significant and positive role that CARTAC hasplayed in helping the region meet its technical assistance needs in thearea of economic and financial management. We are grateful to theIMF for providing the technical and human resource support thatmakes CARTAC possible and to the World Bank, which is the secondlargest cash contributor to the center. Nevertheless, we stress thatcapacity building is a long-term and ongoing process that will not be fin-ished when the current phase of donor support comes to an end at theclose of 2004. We call on the Fund and the Bank to maintain its supportfor CARTAC and on all the donors currently engaged in funding thecenter to continue to do so beyond the end of the current phase.

Voice and Participation

We welcome the progress made by the Boards of both institutions instrengthening the technical capacity in Executive Directors’ offices atthe Bank and the Fund, which will help to enhance the representationof developing countries in the decision-making processes of the institu-tions. Nevertheless, we remain disappointed at the lack of progress onthe structural issues, some of which have been under discussion formany years. We urge the Bank and the Fund to accelerate work towardsenhancing the effective participation of developing countries in theirdecision-making processes.

ICELAND: BIRGIR ISLEIFUR GUNNARSSONGovernor of the Fund

(on behalf of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden)

I am honored to address the 2003 Joint Annual Meetings on behalf ofthe Nordic-Baltic Constituency consisting of Denmark, Estonia, Finland,Latvia, Lithuania, Norway, and Sweden as well as my own country,Iceland. Let me begin by thanking the authorities of the United ArabEmirates for hosting the Annual Meetings in this vibrant city of Dubai.

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Prospects in the World Economy

The world economy has been showing signs of a modest recovery and fur-ther strengthening is projected for 2004. Economic growth, however, remainsunbalanced. Restoring sustainable growth is one of the most important eco-nomic policy challenges that lie ahead. Current accommodative policies areappropriate until a global recovery has been consolidated. Some economieshave, however, now reached the point where little scope remains for tradi-tional fiscal and monetary initiatives. Consequently, it is necessary to pressforward in other areas such as by accelerating structural reforms, promotinggood governance, increasing transparency, and harmonizing standards.Another important task involves enabling low-income countries to enjoy thefull benefits of a globalized economy. An orderly unwinding of externalimbalances also poses a major challenge. To resolve this, fair burden sharingwill be necessary among leading economies and different regions.

Structural Reforms

Economic recovery will continue to be restrained unless countriesspeed up structural reforms. An effective way to improve long-termeconomic prospects is to address structural rigidities that weigh downthe efficiency of labor markets. It must be recognized that demographicchallenges, such as the aging of the population, add pressure on thelabor market and public finances. Increased labor market participationand restructuring of benefit schemes are therefore needed. Authoritiesand labor market participants have to work together in this effort.Other structural rigidities in financial and product markets are of noless importance, and removing such obstacles is conducive to growth.

Many economies are burdened with government deficits in the midstof the global economic slowdown. Automatic stabilizers have beenallowed to operate in order to support growth. This may be prudent andappropriate; however, care should be taken that public finances do notbecome unsustainable. Policymakers are responsible for planning bothfor the short and the longer term, and we encourage governments toconsolidate their fiscal positions in order to enhance their nations’ com-petitiveness. The Fund should continue to monitor closely structuraldeficiencies and advise accordingly.

Good Governance

Economic integration has brought increased prosperity to those whohave been part of the globalization process. Increased globalization alsoimplies intensified competition in most areas. Good governance is,therefore, more important now than ever because it fosters confidence

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and growth, without entailing much additional economic cost. Allempirical studies confirm that much can be gained by embracing goodgovernance, and it is an essential component of crisis prevention efforts.

Good governance is equally vital in both the public sector and the cor-porate world, and its merits are relevant in all countries. Recently, corpo-rate governance issues have been prominent on the world economicagenda as financial markets have been recovering from scandals thatcame to the fore following a period of excesses in equity markets. Inorder to increase confidence in the markets, it is imperative that the cor-porate world adhere to the principles of good governance. Good gover-nance in the public sector is also an essential tool for strengtheninginstitutional capacity, which is fundamental for economic and socialdevelopment. The Fund has an important role to play in this field, and wewelcome the increased emphasis it has given to the issue of governance.

Transparency and International Standards

With the world economy having suffered a confidence crisis, it isimportant to continue to promote greater transparency and accountabil-ity. Various studies have demonstrated that transparency and adherenceto international standards lead to easier market access and lower bor-rowing costs. There is much to gain by applying these simple principles.

It is also important to continue developing international standardsand codes that enhance transparency and facilitate comparison betweencountries and regions. The Fund has invested considerable efforts inpromoting transparency and developing standards and codes in cooper-ation with the World Bank, the Bank for International Settlements, andother organizations. Remarkable progress has been made in this area,but we realize that broad implementation of these standards will taketime, although this is time well spent as improved practices and compa-rability will increase the stability of the international financial system.

We believe that the next steps should be to harmonize accountingstandards at world level. The Nordic-Baltic Constituency encourages allmember countries to support the efforts of the International Account-ing Standards Board to reach a consensus on accounting standards andprinciples. Furthermore, we welcome the new steps taken to increasethe Fund’s transparency, especially the policy of moving to presumptivepublication of all Article IV reports and the required publication ofdocuments in exceptional access cases.

Promoting Economic Progress Among Low-Income Countries

One of the greatest challenges of our time is to win ground in thebattle against poverty. All parties must be fully engaged in this campaign.

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Many initiatives in recent years have borne fruit, but there is still a longway to go; the international community must do better in order toachieve the Millennium Development Goals (MDGs). Here, I wouldlike to focus on trade and its importance for development.

Greater market access will be an essential instrument for improvingthe economic conditions of those living in poverty, and I welcome therecent initiative taken by the Fund and the World Bank aimed at sup-porting the Doha round. At this stage, the global momentum towardtrade liberalization must continue effectively, yet there is reason forconcern over the way that the current international trade negotiationsare proceeding. Progress has been slower than was previously hoped,especially in light of the disappointing result of the WTO meeting inCancun. Another worrying aspect is the trend of bilateral trade agree-ments instead of multilateral agreements.

To support low-income countries, the industrialized nations shouldreduce their overall levels of support for agriculture and textiles anddirect the remaining subsidies away from trade-distorting price supporttowards income support. The advantages of trade liberalization aregreater than the risks associated with it. Reforms in these areas will ben-efit both the industrial and the low-income countries. There might,however, be temporary or transitional difficulties as increased liberal-ization can entail a reallocation of labor between sectors. Governmentsshould be ready to inform and educate their citizens and prepare safetynets to make the transformation more acceptable, both domesticallyand internationally. High-income countries ought to be prepared toassist developing countries in such undertakings. Low-income countriesmust also open up their markets in order to increase the volume oftrade between each other as well as with industrialized countries.

Bilateral and regional trade agreements have become increasinglycommon in recent years. However, the multilateral route is a betterchannel for delivering the dynamic benefits of increased global eco-nomic integration. Bilateral agreements can fragment and complicatemultilateral negotiations such as the present WTO round. Moreover,small and underdeveloped economies are more likely to be left out, andtheir ability to participate in the global economy is therefore disadvan-taged. We encourage the Fund to continue to use surveillance in pro-moting open world trade.

Concluding Remarks

Ladies and gentlemen, improving the world economy is a task thatdemands the participation of every nation. We must press forward withstructural reforms, promoting good governance, increasing trans-parency, and harmonizing standards. This task must also include efforts

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to integrate the low-income countries into the global economy. The cur-rent circumstances provide good reasons for addressing these issues.

The International Monetary Fund has been at the center of worldeconomic cooperation since its establishment. The Fund should con-tinue to play a crucial role in strengthening the areas I have emphasizedthrough its surveillance and its lending activities.

ICELAND: GEIR HILMAR HAARDEAlternate Governor of the Bank

(on behalf of the Bank Nordic Countries)

I am honored to address the Joint Annual Meetings on behalf of theNordic members of the World Bank. Allow me to begin by thanking theUnited Arab Emirates’ authorities for the hospitality and the excellentorganization of the meetings.

Progress and Challenges

The world has seen much progress in poverty reduction over the last50 years, and there are many success stories to learn from. Yet, the chal-lenges continue to be formidable, the global economic outlook remainsuncertain, and the geopolitical situation is tenuous.

Facing the Challenges Through Partnerships

The picture facing us may seem bleak, particularly in the poorestcountries where, in many instances, progress continues to be absent. Weremain especially concerned about the situation in sub-Saharan Africa.Too many developing countries suffer from weak governance, civilstrife, and human rights violations. The growing severity of theHIV/AIDS epidemic poses an increasing threat to development inmany poverty-stricken regions. Also, the weak institutional frameworkfor private-sector development in the poorest countries hampers pri-vate investment, which is so desperately needed to promote economicgrowth and reduce poverty.

However, if there is a goal to aim at, there is a dream to hold on to.We have a goal. The Millennium Development Goals represent aninternational commitment to the poorer people of the world. Reaf-firmed in Monterrey, Johannesburg, and Doha, this global contractembodies an unprecedented level of consensus on what is needed topromote poverty reduction and sustainable development. Accordingly,the developing countries take the responsibility for their own develop-ment by creating an environment for growth and investing in theirpeople; the developed countries provide more and better development

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assistance, along with increasing market access; and international insti-tutions serve as facilitators through more effective analytical and finan-cial resources.

We know that the progress in achieving the Millennium Develop-ment Goals has been slow and uneven. At the current pace, most coun-tries of sub-Saharan Africa will not be able to achieve the goals by 2015.We cannot accept this. All signatories of the global contract need toscale up their efforts and demonstrate results. We do not have muchtime. But how can the goal be reached and the dream realized? I believethat a significant part of the answer is through partnerships—a processcharacterized by mutual cooperation and responsibilities, and embod-ied in the Millennium Development Goals.

The World Bank and True Partnerships Through the PRSPs

Allow me to dwell a little longer on our vision of “partnerships” andturn my attention to the World Bank in particular. Partnership is aboutmore than “division of labor” between the developed countries, devel-oping countries, and international institutions. Partnership is about realownership and equality, and ensuring that all parties have a voice andare listening.

This leads us to the importance of the Poverty Reduction Strategies(PRS) of which the Nordic countries have been strong supporters. Part-nership is inherent in the PRS process, both within the recipient coun-try, as well as between the recipient and the donor community. Thecountry-led nature of the Poverty Reduction Strategies is the key totheir success. The catalytic role that the World Bank plays in supportingthe PRS process is commendable, but in our view the Bank mustincreasingly make the PRS the central focus of its activities. Despiterecent positive steps, the Bank still seems to be inclined to use designsand conditionality that are not always sufficiently aligned with thePoverty Reduction Strategies. Poverty and Social Impact Analysiscould increasingly be applied as a useful tool to identify appropriateconditionality and expand policy options for the countries concerned. Iwould also like to emphasise the responsibility that bilateral donorshave in this respect.

Harmonization and Coordination

True partnership is also about harmonization and coordination. It isabout simplifying and coordinating practices and procedures. It is aboutuntying aid and contributing to an overall successful development out-come instead of trying to attribute it to an institution or a country. It isabout developing countries taking the lead in their own development

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and for us to help them develop capacity and systems that ensureaccountability. Ultimately, it is about making aid more effective and thePRS process work. However, we, the donors, still continue to add moreburdens on already overstretched developing countries. There are stillfar too many separate and individual reporting requirements, we stillprefer to trace our contributions to specific activities, and we still usedifferent procedures and indicators for monitoring.

Harmonization is key to a holistic approach to development and it isimperative that donors are coherent in their policies. We all need toalign our rhetoric with concrete actions. The Rome Declaration on Har-monization marks a milestone on a challenging path. The Nordic coun-tries are willing to follow this path and have taken the first steps. Weurge other donors to do the same. We also expect the Bank to be fullyengaged in the harmonisation agenda and use its instruments effectivelyand in a coordinated manner. This applies, not least, to the use of pro-grammatic lending and Sector Wide Approaches (SWAps). It is alsoessential to develop incentives for the Bank’s staff to work on harmo-nization issues and we strongly encourage Bank Management to furtherpursue ongoing efforts to this end.

Enhancing the Voice of Developing Countries

In a true partnership, all partners need to have a say, to have a voice.The Nordic countries strongly support enhancing the voice of develop-ing countries in the World Bank Group and we welcome the recentlyagreed capacity building measures in the offices of the two sub-SaharanAfrican constituencies. However, decision making that affects develop-ing countries is not confined to Washington. Capacity building in thedeveloping countries must be an integral part of any strategy to increasetheir influence in decision making. Furthermore, transparency andopenness are also preconditions for a more inclusive and informeddecision-making process.

Moreover, the Nordic countries are ready to consider more funda-mental longer-term steps to secure a stronger vote for the developingcountries. In this respect, we could support the increase of basic votesfor each member country. We are also willing to explore other options,such as broadening developing countries’ participation in the Develop-ment Committee and in IDA negotiations.

The HIPC Initiative and Beyond

Mr. Chairman, a prime example of a successful partnership is theHIPC Initiative where substantial progress has been made. We arepleased to see governments in HIPC countries channeling freed

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resources to national priorities, defined under their Poverty ReductionStrategies. Nonetheless, more needs to be done, and the challenges areclear. Many countries risk being penalised by events outside their con-trol, diminishing the success already achieved. Therefore, I would liketo stress the need to review debt conditions at the Completion Pointand to assess whether additional debt relief is needed, in response toexternal shocks. However, it goes without saying that inadequate imple-mentation of sound policies cannot be rewarded with an excessivelyflexible approach. In addition, I would like to reiterate our stance thatsupplementary bilateral relief, beyond commitments under the HIPCInitiative, should be excluded when assessing the need for such addi-tional debt relief.

Moreover, the prospect of longer-term debt sustainability is of par-ticular concern to the Nordic countries. Receiving full debt relief is onlythe start of a long and delicate process. Debt sustainability depends notonly upon the absolute level of debt, but primarily upon successfulimplementation of a complex set of policies that determine economicgrowth and poverty reduction. In this respect, it is important to under-take more detailed debt sustainability analyses aimed at facilitating theadoption of sound and farsighted financing strategies in debt-vulnerablecountries.

Increased financial support from the international community to theHIPC Initiative is essential in order to avoid undermining and discredit-ing the Initiative. It remains critical that multilateral development insti-tutions obtain sufficient financing to cover their cost of debt relief. Fairand transparent burden sharing is as important as ever and the addi-tionality of debt relief remains imperative. Here, I would like to empha-size the need for continued transfer from the Bank’s net income toHIPC. In addition, I remain seriously concerned about the financing ofIDA’s share of the HIPC Initiative beyond 2005.

Trade and Market Liberalization Working for the Poor

Another key pillar for achieving the Millennium DevelopmentGoals is the liberalization of international trade. There are substantialgains to be made from a more just and liberal international traderegime, both for developed and developing countries. Therefore, weregret that further progress could not be made at the meeting inCancun. However, we still have time to deliver on the Doha commit-ments and make trade work for the poor. We cannot afford to let thisopportunity slip away.

It is also important to note that trade liberalization must be wellmanaged and supported by other actions to provide for sustainedgrowth. In this respect, the World Bank plays a central role by facilitating

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the necessary trade-related reforms, as well as by helping countriesstrengthen their competitiveness through improved delivery of basicservices, such as primary education and health, and construction of vitalinfrastructure. A starting point should be better integration of trade-related priorities into the Poverty Reduction Strategies, which wouldenable developing countries to address trade issues comprehensivelyand, thus, ensure better results.

Conclusion

It is through partnerships that we can further country ownership ofdevelopment policies, harmonize development efforts and, as a result,improve aid effectiveness. It is through partnerships that we addressdebt problems and make trade work for the poor. And it is throughpartnerships that we show results, achieve our goals, and realize ourdream.

INDIA: YAGA V. REDDYGovernor of the Fund

Since we met last in April 2003, there have been some signs ofimprovement in the global environment. Recent economic data of somecountries as well as some forward-looking market indicators, particu-larly those relating to financial markets, indicate that we may be seeingsome signs of global economic recovery. Although we share the viewthat this could indicate the beginning of a stronger recovery, we recog-nize that considerable risks persist, though the upside risks appear tooutweigh the downside risks.

The outlook for the United States, Euro area, and Japan is mixed. Ifcurrent trends are any indication, global recovery in the near termwould be led by the United States. However, the widened and histori-cally high twin deficits, in fiscal and current accounts, of the UnitedStates pose the threat of possible disruptive adjustment of the U.S.dollar against other major currencies. We recognize this as a necessaryshort-term trade-off for realizing medium-term gains. We, therefore,urge all the major currency areas to coordinate their policies and tocarefully monitor currency market behavior to minimize potentiallyadverse repercussions on financial markets and on sustainability ofglobal economic recovery. The recent depreciation of the dollar has, tosome extent, minimized the possibility of such disruptive adjustment.Furthermore, continuing robust productivity trends support the strongprospect for recovery in the United States. In this regard, there is con-siderable merit in the United States evolving a medium-term fiscalframework to bring its fiscal position onto a sustainable path.

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The outlook for the Euro area seems rather flat. As in the UnitedStates, there is a comparable element of trade-off. Although the mone-tary stimulus provided by the European Central Bank is encouraging,scope exists for using fiscal stimulus in a more countercyclical manner.In our view, the Stability and Growth Pact should be applied in a flexi-ble manner to allow the automatic stabilizers to run their courses in theshort term, even if that results in marginal breaching of ceilings on fiscaldeficits, especially in countries where this could trigger recovery.

We welcome the reforms undertaken to improve the accounting andauditing standards and corporate governance practices both in theUnited States and the European Union. These improvements are partlyreflected in the strengthening of corporate bond and equity markets.The primary bond market issues have become more buoyant. Sovereignyields, in general, have declined, combined with a compression of yieldspreads. We consider these developments to be supportive of increasedcapital flows into emerging markets and to generally strengthen inter-mediation in international capital markets. Though there was a tempo-rary upward shift in the long-term yields of bonds in the United States,the potential for significant risks of further increase in bond yieldsappears remote. First, the policy interest rates have declined to histori-cally low levels, and upward hikes in quick succession are thereforeunlikely. The housing and mortgage markets, like bond markets, cannotwithstand such sudden shocks. Second, the probability of inflationundershooting and the consequent adverse implications for deflation-ary expectations are feared by many.

The question also remains as to how long and to what extent theUnited States would lead the global recovery. It is important for theEuropean Union and also Japan to intensify structural and financialsector reforms with redoubled vigor. In some countries, labor and prod-uct market reforms should receive priority as important components ofsuch reforms. We encourage the Euro area countries to take steps to pro-mote productivity and efficiency gains, given the minimal scope, in theshort run, for achieving higher labor participation rates. The necessity ofachieving these gains, and a general increase in demand arises from theimpending medium-term fiscal risks associated with demographic trendsand the attendant pension reforms. Similarly, we recognize that more vig-orous steps may help Japan counteract deflationary expectations andaddress the fragility of the financial system. In the medium term, Japanalso requires further restoration of fiscal stabilization.

Growth is expected to remain robust in most emerging-marketeconomies and, to some extent, in Africa. These economies are propelledin no small measure by stronger macroeconomic policies, structuralreforms, and improvements in institutional structure. Prospects havealso improved as a result of general improvements in major industrial

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countries; favorable terms of trade due to non-oil commodity priceincreases; and improved financial market conditions, especially in the bondmarkets. It is imperative that greater resources flow into these countriesto help sustain growth. The current favorable financial market condi-tions, no doubt, provide an opportunity for these countries to steerahead with remaining structural reforms and to achieve greater fiscaland external sector sustainability.

Among the developing countries, emerging countries in Asia con-tinue to remain a bright spot. They have shown extraordinary resiliencein the face of the recent global slowdown and continue to exhibithealthy recovery. Although timely and complementary policy actionstaken by a number of countries to facilitate the revival of externaldemand and expand intra-regional trade are promising, medium-termprospects would depend on the recovery in major industrial countries.

The scope for exchange rate flexibility, particularly in view of therecent buildup of reserves in many countries, has generated a lot ofdebate over the last few months. This calls for a more dynamic andpragmatic approach in the analysis of recent trends in exchange ratesand reserve management practices, keeping in view country-specific cir-cumstances. The recent strengthening of the external position of manydeveloping countries through the buildup of substantial foreignexchange reserves can be viewed from several perspectives. First, it is inpart, a reflection of the lack of confidence in the international financialarchitecture. International liquidity support through official channels isbeset with problems relating to adequacy of volumes, timely availabil-ity, reasonableness of costs, and (above all) limited extent of assurances.Second, it is also a reflection of efforts to contain risks from externalshocks. Private capital flows that dominate capital movements tend tobe pro-cyclical, even when fundamentals are strong. It is therefore nec-essary for developing countries to build cushions when times are favor-able. High reserves provide some self-insurance, which is effective inbuilding confidence (of rating agencies among others) and possibly indealing with the threat of crises. Third, the reserve accumulation couldalso be seen in the context of the availability of abundant internationalliquidity following the easing of the monetary policy in industrial coun-tries. The resultant excess liquidity flowed into the emerging markets.In the event of hardening of interest rates in industrialized countries,this liquidity may as quickly dry up; in that situation, emerging marketsshould have sufficient cushion to withstand such reverse flows of capi-tal. Fourth, and most important, the reserve buildup could be the resultof countries aiming to contain volatility in foreign exchange markets. Itshould be recognized that the self corrective mechanism in foreignexchange markets seen in developed countries is conspicuously absentat present among many emerging markets.

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It is also necessary to recognize that developing countries face majorchallenges in their effort to achieve sustained economic growth, whichcould enable them to make a significant impact on poverty reduction.Recent studies by the World Bank indicate that there would be consid-erable shortfalls in achieving the Millennium Development Goals(MDGs). These failures would not be limited to some underperforminglow-income countries; even countries that have made rapid strides insustained economic growth over the past decade would not be able tomeet critical goals. The level of development assistance currently avail-able, and even the additional commitments made at and since Monter-rey, would not be sufficient to meet minimum financing needs.Developing countries have huge unmet financing needs relative toMDG targets and even with their best efforts, they would be unable tomake up the deficiency. There is a very strong case for substantiallystepping up the quantity and improving the quality of developmentassistance.

There are two aspects to this that we would like to stress. One is theneed to make allocation of development assistance to countries equi-table. The guiding principles should be the incidence of poverty and theeffectiveness of poverty reduction efforts. This is best done in multilat-eral settings so that allocations on the basis of national or strategic con-siderations are kept to the minimum. The breadth of their work,especially the analytic services, and the richness of their developmentexperience improve the quality of policy dialogue. There is also theneed to reduce the transaction cost of development assistance throughbetter harmonization of procedures and processes. The Rome initiativeneeds to be followed up, and bilateral donors should look at ways ofworking with multilateral institutions so that common mechanisms forproject preparation, appraisal, procurement, monitoring, reporting,auditing, and so on could evolve. Another way would be to co-financeprojects and programs that recipient countries draw up and to avoidrunning parallel stand-alone projects that yield suboptimal results andstrain country capacities.

Developing countries have been taking courageous steps in reform-ing their policy environment; improving their institutions of gover-nance; and in general, widening, deepening, and making more equitabletheir delivery of services to the poor. Timely and productive develop-ment assistance as well as increased access to markets are required tocomplement and strengthen these efforts. Developed countries must beprepared to play the role of partners in this process, as they agreed to doat Monterrey. All players in the development process—developingcountries, developed countries, and multilateral institutions—have towork to bring about greater accountability. The monitoring of policies,actions, and outcomes needed to achieve the MDGs can be a useful tool

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to increase the effectiveness of the development process. This taskwould require considerable efforts to improve capacities of developingcountries, particularly with respect to gathering reliable and accuratestatistical data. Such efforts should be a part of the overall developmentprocess and should not be seen as ends in themselves. Side by side, weneed to develop strong partnerships so that country ownership isassured.

Further work is also required to enhance the voice and participationof developing and transition countries in multilateral institutions.Although we appreciate that there are no quick fixes, we would stressthat ongoing dialogue and efforts to develop solutions that better reflectchanged realities are the way forward.

Together, we would work to improve the environment when we seethe benefits of economic growth extending to those who have been hith-erto denied and to those who have suffered painful adjustments. Thereis no single mantra that would work everywhere, and our policiesshould recognize this. But, if we are able to develop a real partnership,whereby each nation is allowed to exploit its comparative advantage,and not be held back by artificial barriers and constraints, there is noreason that we will not succeed.

INDONESIA: BURHANUDDIN ABDULLAHGovernor of the Fund

Let me share with you some of my thought regarding our current sit-uation. I begin with recent economic development and a highlight ofour new policy program, and conclude my remarks by presenting oureconomic outlook.

I welcome the increasing signs of improving development in ourglobal economic scene. I believe the encouraging prospect for a steadyand strengthening global recovery will provide a strong support forbetter growth and reforms in developing countries, including Indonesia.In line with this latest global economic development, Indonesian econ-omy has also witnessed encouraging progress.

Since the last year when we reported in this forum, our economy hascontinued to progress favorably. This is reflected in the improvement ofsome economic indicators, including modest GDP growth at a range of3.5 to 4 percent, easing inflationary pressures, and significant strength-ening and stability of rupiah exchange rate. The economy has shownremarkable resilience in the face of external and domestic shocks inrecent years including the Bali bombing in 2002 and, more recently, theMarriot bombing.

Following a strong performance in 2002, with GDP grew by 3.7 percent,the Indonesian economy recorded a growth rate of 3.6 percent in the

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first half of 2003. We expect to reach our GDP growth target of 4 percent for the year 2003. In the past several months, we have beenquite successful in curbing inflationary pressures. As measured year-over-year, the inflation rate at the end of August fell to 6.38 percent.This performance was largely due to the appreciation of the rupiah andslow growth in base money, in addition to favorable supply factors. Forthe year of 2003 as a whole, we are projecting an inflation rate of around6 percent, lower than our target of 9 percent.

The strengthened rupiah has a positive impact in capping inflation.During the second quarter, the rupiah appreciated over 4 percent fromthe previous quarter. After falling in July 2003, currently the rupiah hastraded in a narrow band around Rp8,500. The appreciation of therupiah during the first half of 2003 was associated with a positive senti-ment towards the country, illustrated by higher dollar inflows, related toprivatization, the sale of IBRA assets, and the upgrade of Indonesiacredit rating.

The drop in inflationary expectations and the appreciation of therupiah has allowed Bank Indonesia to pursue a monetary policy that isdesigned to facilitate an accelerated recovery process by guiding inter-est rates lower. The 1 month SBI rate declined 402 basis points from12.93 percent at the end of 2002 to 8.91 percent at end of August.Throughout the year, the growth of base money has remained withintarget. This gives us confidence that we will be maintaining the growthin money so that there is sufficient liquidity to satisfy the needs of thereal economy, without risking a run-up in inflation.

Supported by improved macro-monetary conditions, the bankingsector shows stronger condition. This was reflected in a stronger capitalstructure, improved NPLs, stronger profitability, and recovery in bankintermediation. All banks are now in compliance with the mandatorycapital adequacy ratio of 8 percent. This has allowed the bankingsector’s net income to grow as new credits extended have increased inthe first half of the year and non-performing loans continue to remainunder control with net NPLs reaching only 1.02 percent in June.

As regards fiscal issues, the process of fiscal consolidation advancedwith the passage of the revised budget for 2003, which targets a lower-ing of the deficit to 1.8 percent of gross domestic product and anincrease in the primary surplus to 2.5 percent of GDP. We are well onour way to meeting this goal, among others, by gradual elimination offuel subsidies. For the first six months of the year, the realized deficitreached only Rp6.2 trillion compared with the full year budget deficit ofRp34.4 trillion. In order to achieve the government’s goal of a balancedbudget by 2005, the government has undertaken an extensive and com-prehensive effort to overhaul the tax and customs administration sys-tems with technical assistance from the IMF. One of the significant

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achievements was the establishment of a Large Taxpayer’s Office. Incustoms, we are extending green lane privileges to qualified taxpayersand improving customs valuation procedures. Indonesia has a relativelylow tax to GDP ratio, which means that the government should be ableto increase tax revenues significantly, not through major changes inunderlying rates, but through the improved monitoring and collectionprocedures. Strict fiscal controls combined with the improved perform-ance of IBRA have allowed the government to begin the process ofreducing the debt burden.

Despite all these encouraging development in the area of monetaryand financial stability as well as fiscal issues, challenges or even problemsremains. These challenges include maintaining consistency and disci-pline of our economic management to support sustainable recovery inlight of the upcoming “graduation” from the IMF program.

To address these problems, Indonesian authorities have been work-ing closely in developing our own economic program to continue thereform path stated in the IMF Letter of Intent. With political stabilityand improving economic and financial performance, the political moodof the majority of people in Indonesia supports the idea of “graduating”from the formal IMF program this year. With the support from interna-tional communities, we are confident that we can and we will be able toobediently and consistently implement the program. The new policyprograms in 2004 onwards will be based on three main pillars.

The first pillar is maintaining macroeconomic stability. To materializethis pillar, for monetary policy, we are in the process of preparing the newframework of monetary policy, that is, inflation targeting framework.This framework provides clarity in our objective and consistency in ourmonetary policy to pursue price stability, thereby gradually improve cred-ibility. For fiscal policy, the government carries on its tax and customreforms as well as its budget reform to simplify the procedure andimproving competitiveness without jeopardizing our fiscal position.

The second pillar comprises of continuing efforts to restructure andreform the financial sector. In the banking sector, in the effort to main-tain financial system stability and improve governance, Bank Indonesiais currently in the process of preparing Indonesia’s Banking Architec-ture (API) that can be used as a comprehensive and forward-lookingplatform for banking policy. We continue to improve banking supervi-sion and increase the role of the capital market in the financial system.

The third pillar of the post IMF policy program deals with ourefforts to enhance our investment climate so that we may achieve alevel of growth sufficient to reduce unemployment and poverty. Keymeasures for this pillar include a new investment law, simplified regis-tration procedures, more participation in infrastructure, and numerousother measures.

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Before closing my remarks, let me figure out the outlook of oureconomy. Looking forward to 2004, we will continue to strengthen ourmacroeconomic fundamentals to be the basis for stronger growth in2004 onward. While monetary policy will remain prudent, as both theinflation rate and the risk premium decline, fiscal policy will stayfocused on achieving sustainability. This will require further steps toincrease revenue collection and improve access to financing. But as therecovery continues we can begin to look forward to strategic invest-ments to improve the welfare of the people and support the develop-ment of the economy.

Good macroeconomic management, however, is not enough to sus-tain high rates of economic growth. High growth requires structuralreforms to make the economy more efficient. Such reform programsthat the government is undertaking include the strengthening of legalinfrastructure, improving governance, and increasing transparency inboth public and private sectors. The purpose of the program that wehave developed is not reform for reform sake, but to restore investor’sconfidence in Indonesia.

We fully expect our macroeconomic policy, coupled with the consis-tent implementation of our structural reform, will allow economicgrowth to reach 4 percent this year and will establish the base of realgrowth of 6 percent over the medium term.

Finally, I would like to thank the IMF, World Bank, and interna-tional community at large for their invaluable support to us in our effortto recover from the crisis, as well as in our effort to reform. We believethat our favorable economic developments will enhance market confi-dence in Indonesia, confidence that we expect to be sustained in thefuture years.

IRAN: THAHMASEB MAZAHERI-KHORZANIGovernor of the Bank

At the outset, I would like to express my profound pleasure of beingpresent at this year’s Joint World Bank/IMF Annual Meetings held inthe United Arab Emirates. I also appreciate the relentless efforts of theorganizers of this very important gathering, especially His HighnessSheikh Zayed bin Sultan Al Nahyan, President of the United ArabEmirates.

This marks the first time that the World Bank/IMF Annual Meetingsare being held in the Middle East. It is heartening to see in this sensitiveregion, all countries of the world, developed as well as developing, withall their diversities, are again joining hands to achieve a sustainableglobal economy. Needless to say, the more the nations would reap the

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fruits of economic cooperation and interaction, the lesser the groundsfor extremism of any sort would be.

We have gathered today under special circumstances while theworld economy is facing great challenges, and the world economic out-look seems to be more promising. Yet full confidence has not returnedto the international markets, and the prospects of world economicgrowth look shaky. The continued instability in Iraq has added to theuncertainty, affecting not only Iraq, but also its immediate neighbors,the region, and the whole world. The evident and immediate conse-quences of the recent developments have led to the reduction of inter-national flows of capital as well as tourism revenues. The worldeconomic slowdown has no doubt led to a reduction of world demand,slower growth in international trade, increased unemployment, as wellas investors’ distrust in international capital markets.

The sustainable solution to this problem would be to muster ourefforts and commit ourselves to achieve the Millennium DevelopmentGoals and even further. The fewer the people in material and educationpoverty and under prejudice, the less the conflicts and extreme actsaround the world.

In fact, a global partnership should prevail where no one feels mar-ginalized. The market economy today has, by nature, helped the voiceof the rich to be heard louder, while the poor also deserve to be given anenhanced voice. In this respect, we welcome the continuation of discus-sions of this very important issue in the Board of Executive Directors ofthe World Bank and IMF in order to increase the relative voting powerof the developing countries as a whole. In this relation, we believe thatthe suggestion to increase basic votes of all member countries in theWorld Bank to restore it to around 10 percent of the total votes, as itwas at the time of founding of the World Bank, will be an appropriatestep. Furthermore, we are in support of the position of the MinisterialGroup of 24 in this regard.

I would also like to seize this opportunity to briefly explain aboutsome of the recent economic developments in my own country. Despitethe low world economic growth rate, my country managed to achieve a6.5 percent growth rate in the last Iranian calendar year ending March21, 2003. The unemployment rate has dropped from 16 percent twoyears ago to 11.2 percent. At the same time, the foreign exchangereserves in the country have increased substantially.

Iran, has also taken giant strides in paving the way for the attractionof foreign investment. To this end, the new Law for the Attraction andPromotion of Foreign Investment has been adopted, which is nowunder implementation recognizing the new forms of foreign investmentand granting the necessary guarantees required. The corporate tax law

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has been revised replacing the older exponential system by a 25 percentflat-rate tax. Apart from the transparencies it brings about, this encour-ages the emergence of bigger enterprises.

The process of privatization also has sped up substantially in Iranproviding unprecedented opportunities for interested entrepreneurs. Anumber of private banks and insurance companies also have beenlicensed recently to work. I would also like to refer to some of the high-lights of our upcoming Fourth Five Year Development Plan as follows:

• Expansion of investment and production through removal of allmonopolies, price liberalization, establishment of specialized courtsfor investment claims, etc.;

• Institutionalization of knowledge economy as the major pillar fordevelopment;

• Designing of a transparent financial and regulatory system in har-mony with international standards;

• Enhancing the voice and participation of civil society in decisionmaking.

At the closing, I would like to thank Mr. Wolfenson and the staff of theWorld Bank, as well as the IMF management and staff, for their sincerecooperation with Iran. I would like to once again express my gratitude toour host country and all the organizers of this event for their ceaselessefforts and wish success for all the dear participants and hope that theguests of the region would leave this event with pleasant memories.

IRELAND: CHARLIE MCCREEVYGovernor of the Bank and the Fund

The era in which the world was neatly compartmentalized is over.The Arabic television story of this morning runs this evening in Europeand America. This growing interconnectedness means that the eco-nomic shocks, the positive stimuli, and, with advances in communica-tions, the news from abroad, are all now transmitted much more rapidlythan before.

Globalization brings both challenges and opportunities. Economiccrises can spread more rapidly, and perhaps more widely than in thepast. However, it also means wider markets for our producers to access,and the pool of investment funds and capabilities that can contribute todevelopment becomes ever larger. One important consequence is thatthe poverty and misery that we might have underrated in the past arenow much more visible and demand our attention. Now, more thanever, we need strong common policies, actively pursued, to address

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global problems. At the same time, sound domestic policies remain offundamental importance.

Progress in the world economy has been very uneven; some coun-tries given poor hands by fate have achieved much. Others, once richand prosperous, have achieved little in recent times but decay and fail-ure. And while access to resources, geographical position, good and badluck in terms of historical developments, all contribute to this disparityof growth and development, good economic management remains a key.

All too often, the roots of crises are familiar. The lessons that shouldbe learned in economic management and development issues are notalways applied. Countries return to the Bretton Woods institutions withthe same old stories. Surveillance activities must be strengthened todeal with this increase in economic integration and to help ensure thatlessons once learned are remembered.

Overnight miracles are rare, but a country that by sensible economicmanagement manages to raise its growth rate by 1.5 percent per annumover that of its neighbor will, in only the time it takes an infant tobecome an adult, enjoy an income one-third higher. And those achieve-ments of economic management, which in any given year may seemsmall, will in retrospect appear remarkable.

And where good economic management and availability ofresources coincides, the results can be very positive. The Arab worldhas a population exceeding 300 million people and much to show todeveloping regions, for example in managing natural resources and incoping with social changes on a vast scale. Proceeds from the sale of oilhave been well used, to modernize infrastructure in the UAE, to createemployment, and build up the tourist sector. Life expectancy in the GulfCooperation Council area has increased by almost 10 years. You havetalented, professional staff, engineers, traffic planners, and hydrologists.You may still have much to do in developing your own region, but youhave much to offer in other regions too.

If we are serious about trying to promote sustainable economicdevelopment, then the economically draining effects of corruptioncannot be ignored. It also compromises growth. Corruption, or lack oftransparency, which hints at corruption, drains confidence.

Government policy must underpin an economic environment con-ducive to investment, competition, and private sector development. It isultimately the wealth-generating capacity of the private sector that pro-vides the basis for long term economic growth and poverty reduction.

The problem of poverty, particularly in Africa, remains a constant.And the obstacle created by high indebtedness to the alleviation ofpoverty in developing countries must be considered. I have alwaysinsisted that the HIPC should deliver a sustainable exit from the debt

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treadmill. I am deeply concerned to see that a number of countriesemerging from the process continue to have unsustainable debt levels.In our national strategy on developing country debt, we supported arevision of the debt sustainability criteria.

I would like to touch for a moment on the Millennium DevelopmentGoals. These, it seems to me, provide a vital framework to work forprogress in development. The Monterrey Consensus, and the commit-ments contained therein, particularly in terms of poverty reduction,should greatly encourage the international community to action andalso to work jointly with the international financial institutions andtrade institutions in order to eradicate poverty.

I think the HIPC should pay more attention to human developmentindicators and should also factor in the economic impact of HIV/AIDSon poor countries when assessing sustainable debt levels. Our meetinghere in Dubai comes in the same week as the United Nations GeneralAssembly has devoted a special session to the HIV/AIDS pandemic.The devastating impact of HIV/AIDS on affected developing countries,particularly the Least Developed Countries, is a fundamental impedi-ment to their ability to make any real progress. It cripples their eco-nomic growth and adds even more to their poverty.

The Bank has a good track record in fighting HIV/AIDS and hasdeveloped a good working relationship with the Global Fund. Finally, Iurge President Wolfensohn to keep the fight against HIV/AIDS firmlyat the centre of the Bank’s priorities.

ISRAEL: DAVID KLEINGovernor of the Bank

The world recognized the need to give priority to the global povertyproblem, and it expressed a wide consensus on this matter in the Mil-lennium Development Goals. Let me devote my statement today to thissubject and say a few words on the challenges facing Israel in its effortsto reduce poverty.

We believe that poverty cannot be tackled effectively if policy is notfocusing on growth. Growth is not a sufficient condition for reduction ofpoverty, but it is, at one and the same time, the highway to raise theliving standards of those who are able to work, and the provider ofresources to support those who are unable to help themselves.

We also believe that in order to realize its potential growth, theIsraeli economy—perhaps like some other small and medium-sizedeconomies—has to be open to the free movement of goods, services,and capital, and has to adhere to international standards of macroeco-nomic management, including the standards for fiscal deficit and price

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stability. Such a framework maximizes Israel’s potential contribution toscience and technology as a major vehicle of growth through interna-tional trade. However, this approach also requires us to make our taxregime competitive with that of other countries, which necessarilymeans commensurately reducing government expenditures to keep alid on debt.

Therefore, the macroeconomic framework constrains the room tohandle the challenge of reducing poverty by just increasing welfare pay-ments. When we come to formulate an alternative strategy, we rely onthe experience and advice of the World Bank and the InternationalMonetary Fund and on the policies of other countries, like thoseadopted by the countries of the European Union.

One fundamental element in our strategy consists of various reformsin the labor market leading to an increase in the ratio of employed per-sons in the working-age population. This is one dimension in which welag behind the developed world. I need not elaborate here on the signif-icant relation between the rate of employment and the incidence ofpoverty.

A second key element in our strategy is targeting of the policy toreduce poverty. Like some other countries, we have a history of increas-ing welfare payments without making a distinction between those whoare able or unable to work and without applying an income test for wel-fare entitlement. The new policy of reducing poverty will have to targetthe poorest and least-empowered population and let them have a dom-inant role in shaping their future.

To evaluate the progress we are making in poverty reduction, weadd to the traditional relative definition of the poverty line a needs-based (absolute) definition of poverty. Once we have a meaningful andmeasurable target, we will be able to make our policy more effective: tointroduce quantitative indicators for follow-up, define legislative meas-ures and budgetary instruments, determine accountability for policyimplementation, and make sure that policymaking and implementationis fully transparent.

The Development Committee communiqué published yesterdaystated “Today we renewed our commitment to achieve the MillenniumDevelopment Goals and to continue our work on implementing thestrategies, partnerships and actions agreed in Doha, Monterrey andJohannesburg.” Israel has been, and will continue to be, a firm sup-porter of this worldwide effort to reduce poverty.

Finally, I would like to extend special thanks to the government andpeople of the United Arab Emirates for their warm hospitality to all theparticipants of the Annual Meetings and for their generous contribu-tion to the efficient organization of the meetings.

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ITALY: GIULIO TREMONTIGovernor of the Fund

The Global Economic Outlook

The global economy has gone through a process of adjusting to thebursting of the asset price bubble and to other adverse shocks over thepast few years. The easing of macroeconomic policies has provided sup-port to demand and activity in the short run, although it also has tendedto exacerbate global macroeconomic imbalances.

While fiscal consolidation in many countries is indispensable, itneeds to be supported by adequate flexibility in the exchange rate poli-cies of all countries, including the emerging market economies in Asiaand Latin America, in order to ensure a fair burden sharing of the nec-essary adjustment process. Exchange rates should reflect economic fun-damentals and be consistent at regional and global levels. To minimizethe risk that the recovery will be aborted, the adjustments in exchangerates should be smooth, progressive, orderly, and fairly shared.

In the euro area, there are good reasons for expecting a modestpickup during the second half of 2003, with the recovery strengtheningfurther in 2004. Confidence is showing signs of improvement, and themacroeconomic stance remains highly supportive of growth. The out-look for inflation has continued to improve.

Prospects for an acceleration of economic growth are more solid inthe United States than in the other major advanced countries or eco-nomic areas. This reflects in part the fact that the cumulative monetaryand fiscal stimulus over the past few years has been extraordinarilylarge. In the short run, this strategy has had positive spillover effects onthe rest of the world. However, it also has led to a deterioration of theU.S. fiscal position and a widening of the external current accountdeficit, while adding to recent upward pressure on bond yields.

In Japan, despite growth in the second quarter, which significantlyexceeded expectations, the outlook remains rather weak and risks aremainly on the downside. Bold action is required to promote corporaterestructuring and address fragilities in the financial system. In addition,continued aggressive steps to combat deflation are indispensable.

We are encouraged by the continued comparatively strong perform-ance of emerging market economies in Asia, the signs of an upturn inLatin America, the solid growth of the largest CIS countries, and theincreased resilience of many countries in Africa.

The MENA region’s poor economic performance reflects mainlydeclining low growth rates in oil exporting countries while, by contrast,the performance of the non-oil exporters is comparable to that of other

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developing countries. Governments in the region must retrench fromtheir direct involvement in the economy; the quality of institutions mustimprove; the domestic economies must be opened up; and modernfinancial infrastructure must be established.

In many developing countries, and particularly in Africa, growth hasbeen far too low with respect to what is needed to achieve the MDGsand to halve poverty by 2015.

Implementing the Monterrey Consensus

As it has been underlined in the Monterrey Consensus, the develop-ing countries have a crucial role to play in ensuring, through appropri-ate structural reforms and policy measures, that a stable and enablingenvironment is in place for generating, attracting and channeling ade-quate resources to foster development and poverty reduction. Thisrequires strong ownership on the strategy to foster growth and reducepoverty. The PRSP, formulated through a participatory process with theinvolvement of the civil society, is pivotal in aligning donors’ contribu-tions with developing countries’ priorities.

Strong ownership on the strategy to achieve the MDGs and to reducepoverty is essential. It is key also for the success of IMF supported pro-grams, and it is a crucial ingredient of any decision aimed at strengthen-ing the voice of developing countries in the Bretton Woods institutionsthrough increased participation in the decision making process andenhanced capacity of their representatives in the Fund. The Fund andthe Bank should continue to explore ways to strengthen developingcountry voices. They also should assess the usefulness of an increase inbasic votes of member countries while safeguarding the principle thatmembers’ voting power should derive from their capacity to contributeand, ultimately, from their relative weight in the world economy.

Better policies and institutions play a central role, but they are notenough. World Bank estimates on the resource requirements to achievethe MDGs by 2015, although very preliminary, show that good policiesalone will not allow developing countries to achieve the MDG targets.Health and environment targets are most at risk. And sub-SaharanAfrican countries are likely to be left behind. What is required there-fore is a well-balanced combination of good policies and increasedresources to finance growth, development, and poverty reduction indeveloping countries.

ODA, domestic resource mobilization, private flows, and increasedtrade opportunities are fundamental sources of sustainable growth. TheBank and the Fund can help create the enabling conditions forenhanced resource mobilization, while donors have to live up with thecommitments they made in Monterrey. Italy is committed to make any

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effort to gradually increase its ODA so as to achieve the 0.33 target by2006 as announced.

Cancun has further underscored that all parties must be willing toengage with each other openly and fairly in order to harness the signifi-cant benefits of multilateral trade. The Fund can support the process oftrade liberalization offering financial assistance in those limited caseswhere measures to implement the Doha agenda may give rise to tempo-rary difficulties in the balance of payments. The Bank has comparativeadvantages to play a critical role in supporting trade-related initiatives.In addition to sensitizing parties to the long-term benefits that wouldresult from a successful round of multilateral trade negotiations, theBank must help enhance trade-related capacities and infrastructure indeveloping countries.

Low-Income Countries

The Fund and the Bank, through their financial and technical assis-tance, can play an important role in helping developing countries estab-lish the necessary preconditions—in terms of institutions, policy, andinvestments—for economic growth and poverty reduction, which in turnare essential for achieving the MDGs. However, it is important that theefforts of multilateral agencies be grounded in the commitment bydeveloping countries to implement their home-grown reform strategies.At the same time it is essential that developed countries provide moreODA resources and open their markets to developing country products.

Thus, it is in this spirit that Italy supports initiatives such as theestablishment by the IMF of two centers for Africa capacity building(AFRITACs). This initiative represents a concrete move by the interna-tional community and donor countries to fulfill their pledges. Throughthe provision of effective technical assistance by fostering ownership,enhancing accountability, and increasing responsiveness, the AFRITACsare meant to operate side by side with the African governments in theirefforts toward strengthening growth and reducing poverty. We are look-ing forward to the evaluation of these centers by next year.

Collaboration between the Fund and the World Bank is a key factorin the strategy towards low-income member countries and should befurther strengthened. In particular, the Bretton Woods institutionsshould not only aim at a clear division of labor but also effective infor-mation sharing. The latter should concern the structure and timing ofprogram conditionality, the progress attained in key economic reforms,and the impact of programs on the poor. The PRSP approach is theright framework for strengthening this cooperation.

The PRSP has proved to be an effective vehicle to fight poverty andfoster a constructive dialogue between authorities and civil society.

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However, much more needs to be done to alleviate poverty, especiallyin terms of increasing institutional capacity. Better coordinationbetween the PRSP process, the PRGF programs, and the PovertyReduction Structural credits by the World Bank is needed. In particular,PRGF programs should be more closely aligned with the priorities putforward in the PRSP, while the Fund and the Bank should set condi-tionality requirements more strictly related with the PRSP objectives.

We are aware that the PRGF funding is being put at severe test andthat, starting from 2006, it will shift to a self-sustained regime that willlimit the ability to support poor countries unless additional bilateralresources are provided.

PRGF countries have scored better than other low-incomeeconomies in terms of macroeconomic growth and stability. However,more analysis is needed to understand to what extent these have beenable to attract more ODA flows with respect to other low-income coun-tries and whether higher economic growth has translated into povertyreduction. At the same time, surveillance should be more effectively tai-lored to the specifics of low-income economies. More emphasis shouldbe placed on the analysis of sources of growth and on the assessment ofthe poverty reduction strategy, as well as on the social impact of rele-vant macroeconomic policies.

We welcome the remarkable progress already achieved by theEnhanced HIPC Initiative. Results in terms of debt and debt servicereduction as well as in terms of social expenditure increase are quite sat-isfactory, though significant challenges remain. The initiative has now toface difficult countries, some showing poor macroeconomic perform-ance and others in conflict or with substantial amounts of arrears. Thesecountries must be recalled of their commitments and helped to findpeaceful and agreed solutions to their problems, but the initiative’s eli-gibility criteria cannot be relaxed.

The governance requirements remain an essential feature in the HIPCframework. Attaining macroeconomic stability, strengthening publicexpenditure management, satisfactorily implementing PRSPs, as well asmeeting other social and structural completion point triggers remain criti-cal for achieving the objectives envisaged through the initiative.

On creditors’ participation, some progress has been achieved. How-ever, our objective is full creditor participation, and we believe thatactions should be taken to put political pressure on noncompliant cred-itors. Reaching a fair burden sharing through full creditors’ participa-tion would also pave the way for reaching a consensus on the change inthe methodology for topping up debt relief to those countries facing anunsustainable debt situation at the completion point due to exogenousshocks beyond the country’s control. For the countries that under thecurrent framework would qualify for topping up assistance, we are

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ready to discuss with the IFIs and other donors possible changes in themethodology for calculating such additional debt relief as well as waysto fill the resulting financing gap for the IFIs themselves.

JAPAN: TOSHIHIKO FUKUIAlternate Governor of the Bank and the Fund

I am very pleased to have this opportunity today to address the 2003World Bank-IMF Annual Meetings as Alternate Governor for Japan. Iwould like to express my gratitude to the government of the UnitedArab Emirates and the authorities of Dubai for hosting this year’sAnnual Meetings.

The World Economy

I welcome the positive signs of recovery that are emerging in theworld economy, and the resulting improvement in global equity mar-kets. While due attention should continue to be paid to downside risks,such as a fall in the prices of goods and assets in some regions, I expectthe world economy to continue to gradually recover in the second halfof 2003, supported by policy efforts in many countries.

The Asian economy is expected to continue its strong growth thanksto the diminishing adverse impact of SARS, as well as receding uncer-tainties surrounding the world economy. In order for Asian countries tomaintain sustainable growth over the medium and long term, it isimportant for them to develop regional bond markets, with a view tobetter utilizing the region’s high level of savings for long-term invest-ments, which are necessary for economic development. In this context,the finance ministers of ASEAN countries, China, Korea, and Japan(ASEAN + 3) agreed in August 2003 to intensify their efforts to developregional bond markets.

With respect to emerging market economies, I am pleased to notethe increasing market confidence as a result of appropriate policymanagement, particularly in Brazil. However, it is essential for thesecountries to press ahead with structural reform, including fiscal consoli-dation, in order to achieve sustainable economic development.

I welcome the IMF’s approval on September 20th of a new arrange-ment with Argentina in the context of its medium-term economic pro-gram. However, Argentina still faces many structural problems, whichcall for far-reaching reforms under the new IMF-supported program. Itis also necessary for the Argentine authorities to proceed promptly withgood-faith negotiations with a large number of external creditors underthe principle of equitable treatment of all creditors.

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The Japanese Economy

The Japanese economy is showing signs of recovery: stock prices arekeeping a rising trend and there has been an improvement in corporateprofits. According to recently released data, Japan’s real GDP in thesecond quarter of 2003 grew by 3.9 percent in annualized terms, sup-ported primarily by well-sustained private consumption and businessinvestment. This was the sixth consecutive quarter of positive growth.In order to achieve sustainable growth, the government will continue topursue structural reform in an integrated manner in such areas as regu-lation, the financial sector, taxation, and government expenditure.

With regard to fiscal policy, the government intends to maintain inits FY 2004 budget a restrained fiscal stance and to pursue greater pri-oritization and efficiency in budget allocation, taking into accountJapan’s difficult fiscal position. As for medium-term fiscal management,the government’s goal is to achieve a primary surplus by the early 2010sthrough the realization of private demand-led sustainable growth andcontinued efforts to improve the fiscal balance. The government willalso address comprehensive tax reform from a medium-term perspec-tive, with the aim of reinvigorating society, as well as the economy, andof regaining the confidence of the people.

As for the financial sector, under the “Program for FinancialRevival” announced in October 2002, the government set a target ofhalving by end-March 2005 the major banks’ nonperforming loan(NPL) ratio as of end-March 2002. Financial statements of major banksas of end-March 2003 show that progress in lowering the ratio is wellon track. The government has also taken rigorous measures to improvethe quality of financial institutions’ capital, including the bold andprompt injection of public funds into an institution whose capital ade-quacy ratio had fallen below the minimum regulatory requirement inorder to preempt any financial crises. The Industrial RevitalizationCorporation of Japan (IRCJ), which was established in April 2003 forthe purpose of revitalizing Japan’s corporate sector, is set to purchasefinancial institutions’ loans of potentially viable firms. Recently, theIRCJ selected a few companies as the first batch of candidates toreceive assistance.

The Bank of Japan (BoJ) has been providing ample liquidity to themarkets under the policy framework of quantitative easing in order tohelp stabilize financial markets and to put an expeditious end to defla-tion. Furthermore, the BoJ in July 2003 introduced a scheme wherebyasset-backed securities would be purchased as part of an effort tostrengthen the transmission mechanism of monetary easing. The BoJ isfirmly committed to maintaining its current policy stance until the con-sumer price index stably registers 0 percent or above. The government,

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together with the BoJ, will make continued efforts to maintain thestability of the financial and capital markets as well as to overcomedeflation.

Strengthening the International Financial System

Despite the IMF’s efforts in the area of crisis prevention, financialcrises have occurred in a number of countries in recent years, highlight-ing the need to further strengthen the measures for crisis preventionand resolution.

Crisis Prevention

In the area of crisis prevention, an important issue to be addressed isthe strengthening of the IMF’s surveillance together with the implemen-tation of sound policies by each country to reduce external vulnerability.I welcome the progress being made by the IMF on various fronts, includ-ing the refinements of the framework for debt sustainability analysis,and hope further steps will be taken toward strengthening surveillance.The Financial Sector Assessment Program (FSAP) is well under way,with many member countries having already completed the assessments.

The Contingent Credit Line (CCL), which was set up as a facility forcrisis prevention, is due to expire at the end of November 2003. How-ever, the need for an effective framework to prevent contagion remainsunchanged. I hope that the IMF’s Board will discuss and come up witheffective measures for crisis prevention before the CCL expires.

Crisis Resolution

For crisis resolution, it is essential to promptly restore the debt sus-tainability of a country in crisis through an appropriate combination ofpolicy adjustment, official lending from the IMF and other internationalfinancial institutions, and private sector involvement (PSI), includingdebt restructuring as necessary. With regard to PSI, I welcome the intro-duction of collective action clauses (CACs) by a number of emergingmarket economies, including Brazil, South Africa, and Korea, followingMexico’s lead. I also welcome the Uruguayan government’s successfuldebt exchange using CACs in the Japanese market. I hope that othercountries will follow suit in introducing effective CACs in their sover-eign bond issues under foreign jurisdictions. With regard to a code ofconduct for crisis resolution, I hope that interested parties will makefurther progress in the discussion of its various elements.

On the IMF’s quota, it is essential that the IMF maintain a sufficientlevel of financial resources for effective crisis resolution. Changes in the

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world economy and financial markets can be abrupt and hard to predict.The IMF should therefore continue to examine quota issues and be pre-pared to act promptly whenever the need for a general quota increasearises. In the review of quotas, we should bear in mind that the distribu-tion of quotas should reflect the current realities of the world economy,as well as the relative position of member countries’ economies.

Development Issues

Now, I would like to address development issues. Economic growthis certainly an essential factor to achieve sustainable poverty reduction.In this context, I welcome the fact that the developing countries havedemonstrated growth that outpaces the world economy on the whole.

Recent Developments Leading to the Achievement of the Millennium Development Goals (MDGs)

It is important for the international community to cooperate closelyin aiming to achieve the Millennium Development Goals (MDGs). Tomove steadily toward the goals, each developing country is expected to localize the MDGs according to the circumstances it faces and then toformulate its own Poverty Reduction Strategy Paper (PRSP) designedto achieve the localized goals. As developing countries vary on manyfronts, such as poverty profile, fiscal situation, and administrativecapacity, it is essential for each developing country to localize theMDGs by identifying the development strategy it needs and prioritizingpolicies to implement it under that strategy. In this context, Japan wel-comes a steady increase in the number of countries that have completedthe PRSP process.

Looking at recent PRSPs, one can observe that more and morePRSPs are putting emphasis on growth-oriented policies with the recog-nition that growth is essential for poverty reduction. Particularly, we wel-come the fact that the World Bank has recently affirmed its commitmentto infrastructure dimension. In this context, I would like to request theBank to analyze the transmission mechanism among infrastructure, eco-nomic growth, and poverty reduction. The Bank would then feed backthe results of such an analysis to its future operations. I would also like torequest the Bank further collaborate with the private sector in order tomake more sustainable operations in areas related to infrastructure,taking account of lessons learned from the past experiences.

As the PRSP process has moved up along its phases from formula-tion to implementation, several issues have emerged. For example,many PRSPs simply list diverse policies without prioritizing them. Someother PRSPs seem to set too ambitious goals. To address these issues, it

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is necessary to firmly cost out each policy in the PRSPs and incorporatethem into the annual budget and the Medium-Term ExpendituresFramework (MTEF), while at the same time keep the whole spectrumwithin the framework of macroeconomic balance and public debt sus-tainability. Developing countries are required to build their capacity insuch areas as fiscal and public expenditure management, and the WorldBank is expected to strengthen support to help such efforts. Once arealistic PRSP has been formulated, the donor community, includingthe IMF and the World Bank, is expected to jointly support the PRSPby aligning its assistance with the PRSP.

To enhance the effectiveness of PRSP approach in the future, it isessential to monitor how developing countries and the donor commu-nity are playing the roles they have committed to, and to feed back itsresults to future PRSPs. When conducting evaluations, it is necessary todistinguish the evaluation of policies from that of the results. Japan wel-comes the fact that policy evaluation now holds a central place in theinternationally agreed monitoring framework.

Assistance to Policy and Human Resource Development

To enhance aid effectiveness, both the developing countries and theinternational community as a whole should make their own endeavors.While the former is requested to establish a prudent institutional capac-ity and policy environment, the latter should extend assistance to devel-oping countries in this respect. Japan is committed to continuouslymaking active contributions in such areas as consolidation of institu-tional capacity and policy environment, and capacity building of thepublic sector. I have the pleasure to announce here that Japan is cur-rently preparing for the establishment of a Global Distance Learning(GDL) Center in Tokyo. To be connected with the other GDL centersin the Asia Pacific Region via satellite, the new facility should be able toprovide such interactive services as remote training and policy dia-logues. Japan will continue working with the World Bank to inauguratethe center in the spring of next year.

Reconstruction Assistance to Iraq, Afghanistan, and Sri Lanka

Regarding countries suffering from conflicts, it is essential to pro-mote human security as well as to extend assistance in developmentdimension such as consolidating peace and building basic foundations.

Stability and reconstruction of Iraq is important. As a member of theinternational community, Japan pledged a total of US$100 million inhumanitarian assistance, and to date has already extended or decided toextend some US$86 million of assistance. One of the key challenges

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that lie ahead is to make the October international donors conferencein Madrid a success. Japan is also committed to make efforts in thisdirection. The situation in Afghanistan also deserves the attention ofthe international community. In this sense, it was high time that theAfghanistan Development Forum was held here in Dubai. As host tothe International Conference on Reconstruction Assistance toAfghanistan in January 2002, Japan will continue to be actively engagedin supporting Afghanistan through the “DDR process” (the process ofdisarmament, demobilization, and reintegration of the former combat-ants), “Ogata Initiative” (a comprehensive development plan for prior-ity regions in Afghanistan), and assistance to reconstruct roads.Consolidating peace in Sri Lanka is also essential. For its part, Japanhosted the Tokyo Conference on Reconstruction and Development ofSri Lanka this past June. At the Conference, Japan expressed its inten-tion to extend assistance of up to US$1 billion for the coming threeyears, subject to the evolution of the peace process in that country.

The Third Tokyo International Conference on African Development(TICAD III)

Japan has been promoting the TICAD process since 1993. As such,its assistance to African countries has been articulated based upon thespirit of the process, which is to enhance both Africa’s ownership andpartnership of the international community. This spirit is echoed in the“New Partnership for Africa’s Development” (NEPAD). I have thepleasure to note that the third meeting of TICAD will be held in Tokyonext week, at the juncture of the tenth year since the process was inau-gurated. I hope that an active discussion will take place to further con-solidate and enlarge the partnership of the international communitytowards NEPAD.

ODA Charter

Next, I would like to inform you that the Japanese Government hasrecently revised its “ODA Charter.” In the new charter, strengtheningpartnerships and collaborating with international organizations areplaced as one of the key principles, and poverty reduction is held up asone of the priority goals. Japan intends to continue supporting thePRSPs based upon the principles set out in the charter. Furthermore, thenew charter stipulates that Japan will enhance policy dialogues withdeveloping countries, paying due attention to their institutional environ-ment and policy capacity, while also reflecting the results of ex-postassessments of development assistance to future ODA policy. We hopethat these attempts will lead to further enhancement of aid effectiveness.

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There is no change in the importance given to the comparability ofdevelopment and environmental dimensions in the new ODA Charter.In this respect, the Japan Bank for International Cooperation (JBIC)will put into place its new Environmental Guidelines effective thisOctober. The new guidelines will introduce, among others, a procedureallowing the complainant to place formal objections. Japan Interna-tional Cooperation Agency (JICA), for its part, is currently working torevise its guidelines for environmental and social safeguards before theend of this fiscal year. I strongly hope that many countries will followtheir lead in order to achieve more sustainable development of theinternational community, especially in developing countries.

Measures Against the Financing of Terrorism

The threat of terrorism remains serious. It is therefore important forthe international community to strengthen measures to combat thefinancing of terrorism. From this standpoint, I welcome the revision ofthe 40 recommendations of the Financial Action Task Force (FATF).The revised recommendations have set a new international standard inthe fight against money laundering and terrorist financing. I also wel-come the substantial progress in the assessments of member countries’compliance with the AML/CFT (anti-money laundering and combatingthe financing of terrorism) standard in the context of a 12-month pilotprogram by the IMF and the World Bank. Based on the results of theseassessments, technical assistance should be provided to help countriesimplement the AML/CFT measures. Japan will continue to contributeto such assistance based on the needs of recipient countries.

Conclusion

More than six years have passed since the outbreak of the Asianfinancial crisis. I welcome the progress that the World Bank and theIMF have made toward improving various aspects of their work. Inspite of such efforts, however, countries in different regions have expe-rienced economic crises. I would therefore like to conclude my remarksby expressing my sincere hope that the World Bank and the IMF willfurther strengthen their efforts toward crisis prevention and resolution.

KOREA: JIN-PYO KIMGovernor of the Fund

It is my great honor to represent the Republic of Korea at the 2003Annual Meetings of the International Monetary Fund (IMF) and WorldBank Group.

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Before I begin, let me sincerely thank the government of the UnitedArab Emirates and the people of Dubai. You have made wonderfularrangements for us, and your hospitality has been gracious.

Global Economic Growth

After a prolonged period in the doldrums, the global economy isfinally mounting a modest recovery. A number of things are helping topropel the economy forward—a reduction in geopolitical uncertainty,stable oil prices, and vigorous policy stimulus by leading economies.Indeed, recent data show that a modest recovery is already on track inthe United States and Japan.

Nevertheless, the risks are, in my view, still mostly on the downside.A full recovery in the European Union has yet to materialize. And thespecter of deflation and falling asset prices continues to lurk in someparts of the world. Given these dangers, achieving a sustained globalrecovery is going to be up to the world’s leading economies.

Together, we must put forth a concerted effort to maintain stimula-tive macroeconomic policies and pursue structural reform.

Challenges and Responses in the Korean Economy

Now, let me turn briefly to recent economic developments in Korea.The growth of the Korean economy is expected to be slow this yearmainly due to the contraction in private consumption and investment.Accordingly, the government has focused its efforts on stimulatingdomestic demand. These include historically low interest rates, a sizablesupplementary budget, and a major package of tax cuts.

Together with the anticipated global recovery, we expect thesemacroeconomic policies to kick-start the Korean economy in thecoming months. By the end of next year, we expect growth to accelerateto its potential rate.

Taking a longer-term view, the Korean government is aiming to raisethe economy’s growth potential by nurturing new engines of growth.One such engine will come from making Korea one of the main busi-ness hubs in Asia. Another will come from the ongoing structuralreforms that are making our economy more competitive and pro-ductive. For example, we are improving corporate accounting andgovernance to increase market efficiency. We are completing the re-privatization of banks. And we are reforming the non-bank financialsector.

Finally, regarding our labor relations, we are working to improve oursystems and practices, and ultimately meet global standards.

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IMF Issues

Let me now touch on the role of the IMF in meeting the challengesahead.

Without a doubt, most countries have reaped significant benefitsfrom the globalization of the world economy and the rise in interna-tional capital flows. At the same time, these benefits have an unfortu-nate flip side—the dangers of volatile capital flows and contagion ofcapital account crises.

To meet these challenges, the IMF must have adequate financialresources to be able to play its role as lender of last resort. However, itis not clear that such resources have been secured. A quota increase istherefore a very important and urgent issue.

Going a step further, I believe that it is important, not only toincrease the total resources available to the IMF, but also to improvethe distribution of quotas among the IMF members. This would notonly better reflect the relative economic realities of member countries,it would also ensure timely and adequate resource mobilization.

I believe that, at the thirteenth General Review, these vital issuesneed to be addressed.

Development Issues

I would note that the Korean government fully supports the jointefforts of the Fund and the Bank to attain sustainable growth andpoverty reduction. In this regard, the government last August made acontribution of 10 million dollars to the Heavily Indebted Poor Country(HIPC) Trust Fund. The government will also actively participate inMillennium Development Goals programs.

With regard to post-conflict countries, we hope worldwide effortswill continue to help the reconstruction of these nations. Althoughmany decades have now passed, the Republic of Korea accumulated agreat deal of experience as a post-conflict country. We will gladly con-tribute to the international effort by sharing our experience and knowl-edge in post-conflict development.

North Korea

Finally, I know that many of you are closely following developmentsin North Korea.

Let me assure you that we have already taken important stepstoward a peaceful settlement. We are confident that we will continue tosee gradual improvements in the multilateral talks. To be truly success-ful, North Korea will need to eventually become a partner in the global

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economy. Getting there will require help, both from the IMF and theWorld Bank.

We therefore urge you to extend to your technical assistance toNorth Korea as it prepares for its membership.

Closing Remarks

Before closing, I am happy to announce that the 2004 Annual Meet-ing of the Asian Development Bank will be held in Korea, on our beau-tiful island of Jeju. I hope to see all of you there next May.

In the meantime, I hope that these meetings will provide a valuableopportunity for us to discuss ways to revive the Middle East economyand overcome remaining obstacles to global peace.

LAO: SOMDY DOUANGDYTemporary Governor of the Bank

On behalf of the delegation of the Lao People’s Democratic Republic,it is my great honor and pleasure to address the 2003 Annual Meetings ofthe World Bank and IMF being convened today in Dubai, the beautifulcity of the United Arab Emirates. I would like to express my sincereappreciation to the management and staff of both institutions, and thehost country for the excellent arrangements made for the meetings.

The Annual Meetings this year are in the midst of an environmentwhere the Bank and the Fund are furthering their cooperation with theinternational community on poverty reduction, and fulfilling their“normal role” of helping the post-conflict countries with reconstruction.These undertakings have been complicated by the prevailing globaleconomic uncertainties. In this context, the Lao PDR has continued toimplement the fifth Five Year Economic and Social Development Plan,covering the period of 2001–05, whereby the Lao PDR continues tomaintain close cooperation with the international community. Thecooperation of the International Financial Institutions (IFIs), the Bankand the Fund in particular, has been eminent to help us implement thereform programs in support of our development goals.

Despite substantial success in several areas, our development effortsof the current year falls somewhat short of expectations. Real GDP forthe year 2002/2003 is estimated at 5.9 percent, attributable mainly toindustry and agriculture despite the floods. This falls somewhat fromthe planned target of 6–7 percent due partly to weakness in tourism andslower private investment. The former cause is linked to the SARS out-break in the region. The latter, however, is partly caused by reducedflow of foreign direct investment resulting from global economic uncer-tainty, and partly due to more cautious bank lending policies.

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Inflation, which was at 7 percent (year-on-year) in early 2002, roserapidly to 17 percent in June 2003, reflecting the effects of higher oilprices in early 2003, and the depreciation of the nominal exchange rateduring the second and third quarters of 2002. The adoption of firmerfinancial policies from expenditure and bank credit controls and increasesin interest rates since October 2002 have stabilized the exchange rate. Asa result, inflation has begun to decrease during the recent months and isexpected to be at single-digit level by end-year.

On the structural front, substantial progress has been made. In orderto improve banking operations of restructured SCBs, the reform of StateCommercial Banks (SCBs) has begun. Four international advisers havebeen employed and started working on their assignments in the SCBs. Asa consequence, significant change has been made in the lending opera-tions of SCBs as reflected by improved loan recoveries and reduced creditgrowth in recent months. Progress has also been made in State OwnedEnterprise (SOEs) reform, as seen by the launching of technical work onthe restructuring strategies and programs for the five large SOEs, and thecontinuing adjustment of service fees of certain SOEs in order to reachthe cost recovery level agreed under the Bank’s Financial ManagementAdjustment Credit (FMAC) and the Fund’s Poverty Reduction andGrowth Facility (PRGF). In addition, efforts have been made in strength-ening fiscal management in line with our reform program.

With regards to our efforts towards achieving our 2020 goal of exit-ing from the least developed country status, the government has com-pleted the consultation process on the National Poverty EradicationProgram (NPEP). This document has been presented to our develop-ment partners at the recent Round Table Meeting for comments andsupport. The donor community has made significant contributions tothe process through comments and pledges of necessary financial andtechnical assistance for implementation. The NPEP’s objectives and pri-orities are in perfect harmony with the Lao PDR’s international com-mitments, particularly the Millennium Development Goals and theLDC Summit’s objectives.

In implementing the NPEP’s objectives, we are mindful of chal-lenges ahead of us that are both of domestic and external origin. Toensure high sustainable growth of 6 to 7 percent over the medium term,the government needs to exert strong efforts towards maintainingmacroeconomic stability, pursuing necessary structural reforms, andcreating a favorable environment to promote investment. Special focusis placed on reducing and maintaining inflation at a single-digit level. Tothis end, a sound fiscal policy would be essential. The government needsto strengthen tax and customs administration as well as public expendi-ture management. Banking and SOE restructuring processes need to becompleted, so as to enhance public confidence to invest in production

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and business activities. In the banking-sector restructuring, we alsoneed to strengthen the supervisory and regulatory framework andimplementation capacity within the central bank to ensure sound bank-ing practices and promote competition in banking services.

In the meantime, our partners in development need to adhere totheir commitments made in the Monterrey Consensus, particularly tomake available necessary financial and technical assistance in supportof developing countries’ development efforts. We consider export-ledgrowth as the key to attaining our poverty reduction goals. We areconcerned with the disappointing outcome of the Cancun meeting, andwe strongly urge the developed countries to remove existing tradedistortions and barriers to enable developing countries to have access totheir markets, in order to achieve the targets of the Doha DevelopmentAgenda. We are encouraged by the prospect that the Bank and theFund will extend the scope of their activities to include trade as an addi-tional channel for helping the developing member countries achievetheir development goals.

As the potential for our country’s economic development lies largelyin the productive and sustainable use of our natural resources, forexport oriented production, we highly appreciate the Bank’s support inthe preparation of the proposed Nam Theun 2 Hydropower Project,and we will continue to work closely with the bank and the parties con-cerned to realize this project. We believe that the realization of thisproject will bring benefits to the Lao PDR and its neighbors.

The Lao PDR supports the quest for enhancing the voice, participa-tion, and voting power of developing countries in the decision-makingprocesses of the Bretton Woods institutions. We reiterate the impor-tance of restoring and maintaining world peace and political stability asprerequisites for attaining the Millennium Development Goals. Withregard to the threat of terrorist activities, the government of the LaoPDR has been cooperating with the international community to counterthe financing of terrorism in line with the United Nations’ SecurityCouncil Resolution 1373. In this connection, we are presently workingtoward having in place the legal framework to combat money launder-ing and the financing of terrorism.

As the global environment continues to remain uncertain, we feelthat there is a need to heighten the spirit of cooperation among thecountries of the world to restore and maintain security, and to promoteeconomic growth and trade in order to bring the benefits of globaliza-tion to all countries.

In conclusion, in the name of the Lao PDR Government, I wouldlike to express my sincere appreciation to the management and staff ofthe Bank and the Fund and fellow member countries for the supportgiven to the Lao PDR. I wish the meetings a great success.

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LATVIA: VALDIS DOMBROVSKISGovernor of the Bank

(on behalf of the Bank Baltic Group)

It is my great pleasure and honor to address the 2003 Annual Meet-ings on behalf of the Baltic States—Latvia, Lithuania, and Estonia.

I will concentrate on the issues that are common to all three Balticcountries and related to cooperation with the World Bank. All otherissues, on which we fully agree, are already addressed in the speech bythe Honorable Birgir Isleifur Gunnarsson.

European Union (EU) accession challenges

Let me touch on some issues that are now on the agenda in ourcountries, the main issue being the EU accession. After finalizing theaccession negotiations at the end of last year, the Baltic countries, alongwith other EU accession states, signed the accession treaties andentered into the final stage of accession to the European Union. One ofthe recent major steps was the positive referendums in our countries.Latvia was the last accession country where, in a referendum just a fewdays ago, people voted for entry into the European Union. EU acces-sion will also mark new challenges for the cooperation of the Balticstates with the World Bank.

For a number of consecutive years, the Baltic countries have beenthe fastest-growing economies among the EU accession states. We hopethat this trend will continue. As you well know, our countries have gonethrough the difficult and complicated transition process. We have comea long way with restructuring our economies and state institutions, aswell as enforcing new legislation. Assistance from the European Unionhas been important. We certainly would not be so far along today with-out the considerable help that we have been given by the World Bank aswell. Therefore, I would like to take this opportunity to extend mygreatest gratitude and compliments to the institution for the work it hasdone for the Baltic states over the past decade. In addition, let me pointout that we are prepared to participate in the development agenda bysharing with other countries and regions the experience we gained inthe transition process.

Cooperation challenges

I would like to emphasize one particular issue on which our coun-tries have good cooperation with the Bank. This is the knowledge econ-omy. Several recent studies suggest that the economies of the Baltic

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states need to increase their competitiveness to become serious playersin the international arena. There is some progress in our countries withrespect to the four main pillars of a knowledge economy: improvementof the policy regime, fast ICT development, changes in the educationand training system; and the beginning of national innovation develop-ment. This important work could be continued in cooperation with theBank so that the Baltic states become countries with a developedknowledge economy. Therefore, I would like to commend the Bank forits effort to support the transition to knowledge economies.

Conclusion

To conclude, let me thank the management of the Bank for its effec-tive management of this multilateral institution. We hope to be able togive back to the institution at least as much as we have been getting our-selves. As members of a constituency, the Nordic countries have goodrole models to learn from, and we plan to do our best by contributing tothe fight against poverty and to all other good causes for which theBank stands.

LIBYA: ALOJELI ABDEL SALAM BREENIGovernor of the Bank

On behalf of the members of the Libyan delegation, I would like tobegin by extending to you, Mr. Chairman, our congratulations on beingselected to chair this year’s meetings, which I hope will meet with greatsuccess under your leadership. I would also like to express my thanksand appreciation to our hosts in the United Arab Emirates for the warmwelcome and kind hospitality you have shown us since our arrival inyour country, and for the many efforts you have made to host theseinternational meetings, being held for the first time in an Arab country,which is a source of pride for us all.

You are well aware of the difficult circumstances facing the Arabworld, particularly the deteriorating situation in Iraq and Palestine,which has led to the depletion of resources and adversely affecteddevelopment not only in the countries of the region, but throughout theworld. The concurrent financial, economic, and security problems havehad a particularly adverse effect on the standard of living in the Arabworld, manifested by increasingly severe levels of unemployment andpoverty. We must all cooperate with the international community tofind rapid solutions to these problems.

Libya has suffered for more than a decade from the severe sanctionsimposed on it, which have hindered development in my country over

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the years. With the support lent by the majority of the internationalcommunity to Libya’s position, these sanctions have recently beenlifted. On this occasion, I wish to express our deep gratitude to all thecountries that contributed to the lifting of these sanctions against mycountry.

To complete the lifting of sanctions, we use this forum to call for therelease of Libyan assets frozen in U.S. banks, as there is no longer anyjustification for freezing these funds, in light of the recent UnitedNations Security Council resolution issued on September 12, 2003.Moreover, such freezing of assets contradicts the letter and spirit of theIMF’s Articles of Agreement and the principles of international cooper-ation and solidarity.

Libya has confronted terrorism in all its forms since the early 1980s,and we understand the danger it poses to international peace and secu-rity, as well as to development in the countries that have been or arecurrently exposed to it. Libya condemns terrorism in all its shapes andforms and stands ready at all times to cooperate with the internationalcommunity to strike at its roots and eliminate it. In this regard, Libyahas concerned itself greatly with the subject of money laundering and hastaken a number of measures to combat it, including the establishmentof a special financial data unit in all banks operating in the country.

Libya is committed to promoting development, especially in thepoorest countries, and has granted many developing countries varioustypes of loans and assistance amounting to billions of dollars on conces-sional terms. This aid has been aimed at enhancing development andbuilding infrastructure in the health, education, and other sectors, par-ticularly in the African continent and specifically in our neighboringcountries. Our efforts have undoubtedly contributed to the fight againstpoverty and all its negative manifestations in poor communities.

In this regard, we are prepared to cooperate with the financial anddevelopment institutions to offer additional assistance and loans, andwe call on the international community to increase its efforts, throughthese institutions, to reduce poverty by devoting more resources todevelopment in poor countries, thus ensuring the achievement of theMillennium Development Goals, raising the living standard of thepeople in these countries, reducing poverty, increasing educationopportunities, and combating deadly diseases.

My country has recently adopted a number of fiscal, monetary, andtrade reform policies to correct the imbalances in the Libyan economyand spur development. We welcome the opportunity to cooperate fullywith the World Bank and the International Monetary Fund in the areasof technical assistance, training, and promoting a suitable environmentfor investment in Libya.

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I would like to conclude by expressing to the World Bank and theIMF my country’s sincere appreciation for their efforts to promotedevelopment by providing assistance to the poorest countries of the devel-oping world. We call on these institutions to continue and increase theirefforts to eliminate poverty, fight ignorance, and reduce the gapbetween the various classes of society—goals that they have long strivento achieve.

FYR MACEDONIA: PETAR GOSEVGovernor of the Bank

Since it gained its political independence in 1991, the formerYugoslav Republic of Macedonia has been undergoing a process ofcomplex economical and political reforms aimed at development of acontemporary democratic society with a market-oriented economicsystem. In the process of transition, the Macedonian economy faced alarge number of external shocks (trade blockades, economic sanctionsimposed on neighboring countries, and a security crisis in the regionand in the country), which had an impact on the dynamics of the eco-nomic growth.

The process of macroeconomic stabilization commenced in 1994. Inaddition to the restrictive monetary policy, it encompassed a drasticreduction of the budget deficit. The fiscal consolidation, however, wasto the largest extent a result of short-term measures rather than of theimplementation of complex reforms. Despite the results accomplishedon an aggregate level, the budget structure remained unfavorable fromthe perspective of providing more significant support to economicgrowth. The Kosovo crisis, which began in 1999, and especially thecountry’s security crisis, which began in 2001, caused a deterioration ofthe fiscal position. The General Budget deficit in 2001 reached 7.2 percentof gross domestic product (GDP), and in 2002 it remained at the highlevel of 5.6 percent.

Given this situation, the main objective of the macroeconomicpolicy in 2003 was fiscal consolidation. The General Budget deficit in2003 is estimated to be reduced to the level of 2.5 percent of GDP,which represents an impressive reduction of 3.3 percent of GDP in onlyone year. Not only has the objective been achieved in the first eightmonths of this year, but it has been surpassed. The basic medium-termobjective of the public finance policy is a gradual reduction of the deficitat a level of around 1 percent of GDP. As opposed to the impressivebudget consolidation in 2003, which was aimed at establishment of ini-tial discipline in public finance, the further reduction of the budgetdeficit is to be achieved gradually. In parallel with this task, the process

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of improving the public expenditure structure is ongoing. Thus, roomfor a gradual increase of capital expenditures and achievement of alevel compatible with the most advanced transition economies is beingcreated.

The reduction of the General Budget deficit is significant for theincrease of national savings, reduction of interest rates, increase of cred-its to the private sector, increase of investment activity, and reduction ofthe need for foreign financing. This is confirmed by the achievement,after several years of rigidity, of a reduction of the interest rates on thedebit balance of banks. This reduction was in part the result of measuresto reduce the costs of banks and increase foreign exchange crediting inthe country. The fiscal consolidation and disciplined application of themonetary strategy to the targeting of the foreign exchange rate enabledmaintenance of inflation at a low one-digit level that will not exceed 1 to2 percent in 2003. As far as price stability is concerned, the formerYugoslav Republic of Macedonia belongs to the group of the most suc-cessful countries in transition, with an average annual inflation rate ofbelow 3 percent from 1997 to 2003.

The case of Macedonia is a clear example of the fact that develop-ment is a much more complex issue than achievement of price stability,which is a necessary but insufficient condition for dynamic growth.Analysis of the three basic components of the integrated developmentconcept (sustainable economic, social, and regional development),shows, in the case of Macedonia, that the economic component is theone that lags behind the most, although the other two componentsheavily lag behind as well. The former Yugoslav Republic of Macedoniawas in fact much more successful at achieving and maintaining price sta-bility, reducing the budget deficit, and changing the ownership structurein enterprises than at efficient restructuring and realizing dynamic eco-nomic development.

The GDP growth rate was low during the whole transition period, sothat in the period of political and security instability in 2001, the econ-omy entered the zone of recession, which continued in 2002. By the endof 2002, there was a moderate revival of the economic activity, whichalso continued in 2003. Still, Macedonia has not reached the level ofGDP that it had before obtaining its economic independence.

The poor dynamics of the economic growth is the reason for the biggestproblem in the former Yugoslav Republic of Macedonia—unemployment,which is estimated at the level of around 30 percent. Therefore, what isneeded is development of a new economic strategy, the objective ofwhich is realization of more dynamic and sustainable economic growthin a long run. The basis of this strategy should be strengthening ofprivate sector competitiveness and creation of new jobs.

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In order to realize the commitments of the government for increas-ing employment, reducing poverty, and increasing the standard ofliving, the Macedonian economy must realize more dynamic economicgrowth, which on average should not be lower than 5 percent. In orderto achieve this, the country needs a new development strategy that isbased on policies, which in accordance with empirical results, show apositive correlation with the growth: maintenance of low and stableinflation, control of public expenditures, openness of the country, com-pliance with ownership rights and the law, development of the humanfactor, and achievement of balanced regional development. Thereby itis very important these policies not deteriorate the distribution ofincome so that poorer people reap the benefits of economic growth.

I will elaborate more concretely on some of the most significantchallenges:

Redefinition of the Government Role

The government should provide room for the private sector and afavorable investment environment for development of entrepreneur-ship. That means strengthening the institutional capacity of governmentinstitutions so that they can provide high-quality and efficient publicservices. I consider the credibility of the government and the capacity ofgovernment institutions to be of key importance for the successful real-ization of the complex reform process. Therefore, the public sectorreforms supported by the World Bank are one of the priorities of thegovernment of the former Yugoslav Republic of Macedonia.

The creation and maintenance of new jobs must be supported by thegovernment by labor market reforms, as well as via an efficient systemof educational, health, and social protection. The last element is espe-cially important for mitigating the consequences of the structuralreforms on the most disadvantaged of the population, as well as for pro-viding public support for the implementation of those reforms. Allthese elements are an integral part of our three-year Country Assis-tance Strategy supported by the World Bank.

Openness to Global Financial and Trade Tendencies

Economic growth in the former Yugoslav Republic of Macedonia, asmall country with a market of two million inhabitants, is to a large extentdetermined by foreign demand for Macedonian products. The country’sshare of the foreign trade in GDP—90 percent—is satisfactory. However,the balance between exports and imports is very unfavorable—hence theneed to achieve more dynamic growth rates of exports.

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Post-Privatization Enterprise Restructuring

This issue is closely connected to the problem of low growth andeconomic entities’ insufficient competitiveness. The privatizationprocess in the former Yugoslav Republic of Macedonia has almost beencompleted. The change of ownership, however, does not by itself ensureincreased efficiency of enterprises. Therefore, by the end of the year, allresidual shares of the Privatization Agency will be sold at auction.Strengthened corporate governance will be stimulated through elimina-tion of subsidies, strengthening of the collection of claims, and simplifi-cation of liquidation procedures. This process encompasses completionof the restructuring of 30 loss-making enterprises, which is to be accom-plished within the framework of the Financial and Enterprise SectorAdjustment Program (FESAL) of the World Bank.

All these activities mean finalization of the passive process ofrestructuring. The second stage of active restructuring of enterprises ismuch more important from the perspective of strengthening competi-tiveness. The government plays the role of a supporter of this processby stimulating various projects and investments and by supportingnewly established high-tech enterprises, entrepreneurship, and so on.To that end, the establishment of the Agency for Entrepreneurship pro-motion is under way, and other measures are being taken to simplify theprocedures for registering new enterprises in accordance with ForeignInvestment Advisory Service (FIAS) recommendations. It should alsobe added that the government is firmly committed to the fight againstbureaucracy and corruption, for which an anti-corruption strategy hasbeen uncompromisingly implemented.

Intensification of Investment Activity

Investment activity in the previous period was at a very low level. Toaccelerate economic growth as well as achievement of an investmentrate of 25 to 26 percent of the GDP, a savings rate of 20 to 21 percent ofGDP (10 or so percentage points higher than the existing level) hasbeen established as a medium-term objective of the macroeconomicpolicy. Disciplined public spending and development of long-terminstruments for saving (pension system reform, issuance of governmentbonds) will contribute to the increase of domestic savings and improve-ment of development potential. This also anticipates more efficientallocation of savings, which requires further strengthening of banking-system competitiveness.

What is especially required for creation of new jobs are investmentsin new export-oriented enterprises (what are known as “greenfield”investments). In this context, as a minister of finance of a small country,

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I would like to publicly support all initiatives within the World TradeOrganization (the trade negotiations in Doha, Monterrey, Cancun, andso on) for increased opening of developed countries’ markets to theproducts of developing countries, a longer-lasting and more dignifiedsource of development and poverty reduction than official donations.Then, we might say that globalization is a process that really createsequal opportunities for development of the undeveloped and devel-oped, poor and rich countries.

MALAYSIA: JAMALUDIN MOHD JARJISGovernor of the Bank and the Fund

Global Economic Outlook

Since we last met last fall, prospects for the global economic recov-ery have improved. There is now greater certainty with respect to therecovery in the global economic outlook. In this regard, we are indeedheartened by recent assessments by international financial institutionspointing toward the strengthening of global growth during the secondhalf of 2003 and in 2004, especially in the United States and Japan. Inthe Asian region, economies are also showing improvements, followingthe aftermath of the SARS outbreak. The threats of geopolitical risksarising from the war in Iraq as well as SARS have since abated. Theseeconomies have also weathered the global economic slowdown andAsia is set to be the fastest-growing region.

The performance of the Malaysian economy has also been encour-aging. Our first quarter growth of 4.6 percent was higher than antici-pated, and second-quarter growth remained strong at 4.4 percent,despite the impact of the war in Iraq and SARS. As such, we have regis-tered an average growth of 4.5 percent during the first half this year,achieving the target set for the whole year.

The better performance has been the result of the government’s boldand prompt measures to stimulate the domestic economy through theimplementation of The Package of New Strategies. Moving forward,Budget 2004, recently tabled in parliament, continues to focus on thedomestic private sector to spearhead economic growth. The improvedglobal economic outlook will also contribute to sustaining our export sector.

Globalization and World Trade

In line with the expected improvement in the global economy, worldtrade is also expected to strengthen. Trade is vital because it ensuresincreasing flows of financial and investment resources. In this regard,

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trade will definitely contribute to the economic recovery, particularly inemerging economies. Notwithstanding this, we must work toward thefull engagement of developing countries in global trade negotiations toensure that these countries will benefit from the expansion in worldtrade. These countries must be given better market access for theirexports, because this is the only way to enable them to sustain their eco-nomic growth and reduce poverty. However, the rules of internationaltrade have discriminated against the poor countries. In this regard,developed economies must take the lead in reducing protection andtrade barriers by adopting policies that are conducive to developmentof the developing countries.

We note the outcome of the recent WTO negotiations in Cancun.From Seattle to Doha and Cancun, the writing was already on the wallthat trade talks would be jeopardized because of the resentment fromdeveloping countries. We must resolve core issues, especially in agricul-ture and manufacturing. We must not attempt to bring new issues to theWorld Trade Organization agenda.

Malaysia supports globalization. But globalization must ensure alevel playing field for all. We must remain alert to problems of develop-ing countries, their circumstances, their stage of development, and theircapacity to deal with new issues. The developing world, where themajority of the world’s population live, must be assisted in capacitybuilding to enable it to be better engaged in the global trading system.We must work toward a world trading system that can empower thedeveloping world and foster its economic growth and prosperity. If not,the world would continue to be a poorer place.

Millennium Development Goals

Although many countries in the developing world have benefitedfrom economic growth, many remain entrapped in poverty and impov-erishment. We are encouraged by efforts to move forward the agenda ofMillennium Development Goals. We also welcome the continuedprogress made on the Highly Indebted Poor Countries (HIPC) Initia-tive. However, we urge developed economies not only to meet theirpledges but also to meet any financial shortfall. Wealthy nations havepledged to put 0.7 percent of gross national product into development,but many have yet to meet that target. We must also work towardspeedier implementation of the HIPC Initiative. Several of the heavilyindebted poor countries face difficulties in meeting the stringent condi-tions of the initiative. Therefore, we must ensure that conditions aredesigned according to differences in countries’ circumstances and thatflexibility is accorded. We are pleased with the innovations introducedunder the thirteenth replenishment of the International Development

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Association (IDA-13), in particular the grant element, and we lookforward to agreement among donors on financing of shortfalls createdby this grant element.

Enhancing the Voice of Developing Economies

The Bank and the Fund must continue to seek pragmatic and inno-vative ways to reaffirm their commitment to provide financial and tech-nical assistance to help the poor attain economic growth and prosperity.They must also find ways to strengthen the voice and participation ofdeveloping countries in Bank and Fund decision-making processes, inparticular with respect to improvement in the quota and voting struc-ture. Only then can we ensure fair participation by all.

We appreciate the work that has been done by both the Bank andthe Fund in dealing with these challenging institutional and structuralissues to enhance the voice of developing and transition countries at theBretton Wood Institutions. We agree with the view that clear practicalsteps are required on three fronts: shorter-term capacity-building assis-tance for the most overstretched executive directors and constituencies,medium-term institutional change, and longer-term change on the morechallenging structural issues. We are pleased to note the progress thathas been made with regard to the first front.

However, we acknowledge that the prospects of any major structuralchanges appear to be remote in view of the need to manage strongreservations on the part of major shareholders, as well as the need forexecutive directors on the boards representing developing countries tobe united in approaching the different elements of the reform agenda.

For their part, developing and transition countries must continue withefforts to build capacity at both the country level and in the boards of thetwo institutions. The challenge, therefore, is for developing countries tobe represented by a group of qualified and experienced executive direc-tors and staff who are capable of exerting strong influence in the boards’daily decision-making processes. This is important given the practice ofthe boards to make most decisions by consensus, instead of voting.

Conclusion

Let me reiterate that although recent indicators point to an improve-ment in global economic outlook, recovery may remain fragile. Macro-economic policies must continue to be supportive, and we must focus onefforts to reduce vulnerabilities over the medium and long term. Inter-national financial institutions must be more effective in strengtheninggrowth as well as stability to ensure that the world will be a better placefor all.

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MALTA: ANTHONY ABELAGovernor of the Bank

It is an honor to address the Annual Meetings of the InternationalMonetary Fund and the World Bank. I thank the President andGovernment of the United Arab Emirates and the authorities of Dubaifor the excellent arrangements for these meetings and for their warmhospitality.

Since the last Annual Meetings, two of the IMF Deputy ManagingDirectors, Mr. Eduardo Aninat some months ago, and more recently,Mr. Shigemitsu Sugisaki have left the Fund. I would therefore like toexpress my appreciation for their contribution to the reform of theinternational financial system. I would also like to welcome Mr. AgustinCarstens as new Deputy Managing Director. I am sure that with hisextensive experience in the financial and fiscal field he will contributesignificantly to the work of the Fund.

Turning to developments in the international economy, it is encour-aging that the much awaited global economic recovery now appears tobe underway. At the same time, it is also satisfying to observe that finan-cial markets have remained resilient in the wake of the economic slow-down and the geopolitical uncertainties of recent months. Furthermore,the correction in asset prices—which had risen sharply in anticipation ofa global economic recovery that turned out to be much weaker thanoriginally projected—has been less destabilizing than expected. Thisnotwithstanding, prospects in the major economies continue to be char-acterized by considerable uncertainty. While the U.S. economy appearsto have gathered some momentum, the performance of the euro areacontinues to disappoint with a weak recovery projected to take place inthe second half of this year. The other major economy, Japan, has expe-rienced a welcome turnaround but this may turn out to be short-lived.Consequently, many countries which are highly dependent on externaldemand originating from the three largest economies are expected tooperate below potential for some time to come, and while the risks of aprolonged deflation in most countries seem to have subsided, theycannot be ruled out.

Against this unfavorable background, the Maltese economy experi-enced a contraction in 2001 and then returned to positive, though slow,growth a year later. In 2003, economic activity is expected to continue toexpand, though at a modest rate reflecting the impact of the expectedsluggish growth in external demand. Malta’s recent economic perform-ance has been affected by the uncertainty surrounding the outcomes ofthe EU referendum and the general election held earlier this year andby the war in Iraq. The performance of the export-oriented sectors isnevertheless expected to improve during the second half of the year.

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The recovery in private investment, coupled with a stronger fiscal stim-ulus, are also expected to contribute to growth.

In the wake of slow economic growth and the absence of inflationarypressures, the central bank eased its monetary stance by lowering itscentral intervention rate on two occasions. The bank continues to adopta fixed exchange rate as its intermediate target to achieve its primarygoal of price stability. It is the intention of the monetary authorities tomaintain this exchange rate strategy as the country prepares for EUaccession next year and future participation in the Economic and Mon-etary Union (EMU). In line with preparations for EU membership,capital controls were further eased at the start of the year and are to becompletely lifted upon accession in May 2004.

The lackluster performance of many developing countries has com-pelled policymakers to take a closer look at the impediments to fastergrowth. The factors at play are various, and include the slow pace ofstructural reforms, the existence of large external and fiscal imbalancesand, in some countries, weak financial systems as the persistence ofinadequate provisions for nonperforming loans result in a loss of confi-dence in the ability of financial market players and corporations to meettheir obligations.

Of all these factors, however, fiscal reform is perhaps the arearequiring most attention, particularly when accommodative monetarypolicies seem to have had only limited success in bringing about the nec-essary economic stimulus. Malta too has registered a substantial widen-ing of its fiscal deficit as the slow pace of economic growth took its tollon government revenues. The government is committed to reducingthis imbalance to a more sustainable level over the next three years,even though it recognizes that the prospect of an ageing population, theloss of revenue implied by the planned trade liberalization measuresand the implementation of reforms associated with EU membershipmake fiscal consolidation a daunting task indeed.

Difficulties in meeting fiscal targets also appear to be experienced bymany high- and middle-income countries, particularly on the Europeancontinent. This will have implications in terms of the capacity of the inter-national community to increase official development assistance in linewith the targets set at Monterrey. In this regard, while we agree that fur-ther work on an International Financial Facility should be undertaken,we also believe that creditor and donor countries should strive to providetheir share of bilateral debt relief and multilateral financing to the HIPCinitiative. In addition, developed countries should grant improved marketaccess for the products of the least developed countries while assistingthem to set up the necessary institutions that would enable them to par-ticipate more effectively in the world trading system. In this regard, wenote with concern the unsuccessful outcome of the ministerial meeting in

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Cancun earlier this month. Despite this failure we still expect the Fundand the Bank to continue with their initiatives to integrate trade-relatedaspects in their technical assistance programs for developing countriesand to streamline capacity-building projects through better coordinationwith other regional and multilateral agencies.

While the Cancun outcome augurs little in terms of improved globaleconomic prospects and the integration of the developing countries inthe world’s trading system, the role of the IMF and the World Bank willbe crucial in supporting members’ efforts. The latter should focus onthe creation of a stable macroeconomic environment, a sound financialsystem and a diversified economic structure so that unexpected changesin market conditions can be more effectively managed and externalimbalances redressed.

At a time when terrorism has become another major threat to thestability of the international financial system, both the Fund and theBank should continue to encourage members to adopt anti-moneylaundering standards and strengthen their efforts in the fight against thefinancing of terrorism. Malta strongly supports such efforts andendorses the forty recommendations on money laundering approved bythe Financial Action Task Force (FATF). It is also satisfying to note thatthe Fund and Bank have strengthened their assessment of membercountries’ anti-money laundering practices and other measures tocombat the financing of international terrorism through their reports onFinancial Sector Assessment Programs (FSAP) and Standards andCodes (ROSCs). I am happy to say that a FSAP recently carried out onMalta’s financial system concluded that Malta has a comprehensivelegal framework and strongly adheres to most of the international stan-dards and codes in this regard. This legal framework also comprises theessential elements for AML and CFT.

I would like to conclude by thanking the management and staff ofthe Fund and Bank for their continued support and cooperation. AsMalta proceeds with its structural reforms, it continues to benefit signif-icantly from their technical assistance. I wish both institutions contin-ued success in the challenging tasks they will be undertaking in thecoming year in an international environment which continues to becomplex and uncertain.

MYANMAR: HLA TUNGovernor of the Bank

It is a privilege for me to address the 2003 Annual Meetings of theInternational Monetary Fund and the World Bank. Mr. Chairman, atthe outset, I would like to join the other speakers in extending mywarmest congratulations on your election to the chair.

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On behalf of my delegation and on my own behalf, I would also liketo take this opportunity to thank the government and the people of theUnited Arab Emirates for hosting this year’s Annual Meetings, which isthe very first time to be held in the Arab world. We would like to thankyou for the warm hospitality that is being extended to our delegationand the excellent arrangements that have been made to make our stayin Dubai a very memorable one.

We are encouraged to note that the global economy is now on itsway to recovery. However, the global economic environment, thoughimproved, has not stabilized as yet. There are still uncertainties, risks,and challenges ahead that need to be overcome. To further consolidatethe recovery and stabilize the world economy is a challenging task forgovernments around the world. While developing countries will need tocontinue their economic restructuring, the developed countries will alsoneed to increase their share of contribution for the social and economicdevelopment of the developing countries.

The improvement in the external environment augurs well forgrowth prospects of our Asian region. The success in controlling SevereAcute Respiratory Syndrome (SARS) has also removed one of the keyuncertainties that confronted many of the countries in the region. Atthis point, I would like to mention that, fortunate for us, SARS neveroccurred in our country.

However, risks such as the recurrence of SARS, an unexpectedreversal in the outlook for leading major industrial countries, and thepersistent current account imbalances among industrial countries stillremain. Therefore, we should remain vigilant, and leading major indus-trial countries should take preemptive measures for positive global eco-nomic and social prospects.

While talking about the global and regional economic situation, asis customary at these meetings, I would like to now draw your atten-tion to Myanmar’s domestic economic progress. Myanmar has beenmaking efforts at achieving economic stability not only to fulfill thebasic needs of its people but also to be in tandem with the develop-ments of the other countries and, at the same time, for the benefit ofthe region by providing adequate food supply in this age of foodscarcity.

I am happy to state that the economic performance of Myanmar hasbeen very good in recent years. The significant growths that have beenachieved are attributable to the government’s guideline and effortstogether with the Myanmar people’s undeterred determination to strivehard for sustaining the growth momentum and improving the standardof living. It would be opportune to point out that Myanmar has for thepast 15 years depended mostly on its own resources to achieve the pres-ent notable progress.

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On the monetary front, a comprehensive system of reporting is inplace for verifying the banks’ compliance with regard to the requiredratios, and NPLs of the banks are at a very manageable level of 2.09percent. On the fiscal front, due to intensive efforts in the implementa-tion of an effective tax administration and collecting system, while atthe same time cutting unproductive expenditures, the budget deficit toGDP ratio, in 2002/2003, stands at around 3 percent. The externalsector is also improving with the balance of payments showing anoverall surplus and the gross reserves at almost 3.6 months of importcoverage.

We have also continued our task of building economic, institutional,and social infrastructures. However, it is regrettable that Myanmar hasbeen denied access to much-needed resources for its socioeconomicdevelopment for over 15 years from the international financial organi-zations due to the politically motivated actions of some members.

As you are all aware, the success of national efforts at developmentwould be achieved faster and quicker when bolstered with internationalsupport. We understand that there are many challenges that exceedthe capacity of individual countries to resolve alone. Nevertheless,Myanmar intends to proceed with its own efforts to sustain its growthmomentum.

In addition to the suspension of multilateral financial assistance,economic sanctions have been imposed recently on Myanmar. As youknow very well, in reality sanctions do not benefit anybody includingthe country on which the sanctions have been imposed and the coun-tries that impose them. At this time of giving priority to poverty reduc-tion by the international community, imposing sanctions is directlycontradictory to the objectives of the community and adversely affectsthe social well being of the grass root levels.

I would also like to point out that the economic sanctions imposedon Myanmar are not in line with the IMF’s Articles of Agreement aswell as with the provisions of the World Trade Organization’s Charter.As a legitimate member of these organizations, I would like to objectagainst these unfair and unjustified sanctions and freezing of Myanmarassets, which are not only contrary to the multilateral organizations’principles but also to basic humanitarian and social values.

Accordingly, at this forum, I would like to call for an end to the sus-pension of financial assistance and the economic sanctions imposed,undeniably without fairness and justification, on Myanmar. However, Iwould like to reiterate that we are willing and intend to continue to workand cooperate closely with the international financial organizations.

I would also like to take this opportunity to stress our understandingthat the chief objectives of the Bretton Woods institutions are purelyeconomic in their nature and character. However, measures taken by

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these institutions are now totally based on political considerations, whichis unacceptable and not in line with the objectives of their charters.

It should also be mentioned that the economies and institutionalcapacities of member countries vary according to their different levelsof development. As such, the institutions will need to adopt a broaderview when advising member countries and to refrain from forging one-size fits for all policies. From this, the institutions should understandthat specific features play an important role in the development of eachindividual country. Therefore, in determining appropriate macroeco-nomic policies for member countries, the institutions should take thisfact into consideration and design appropriate policies that would servethe needs of the country concerned.

At a time when the Fund and the Bank are undertaking the task oftrying to secure a better future for all of us, I wish to remind that dueconsiderations be given to the developing countries’ role and voice inthe policy decision making process of the two institutions.

In conclusion, I would like to inform you that we will be keeping toour plans for economic growth and stability. I wish both the Fund andBank success in their new year of operation.

NEPAL: PRAKASH CHANDRA LOHANIGovernor of the Bank

It is my pleasure and honor to address the 2003 Annual Meetings ofthe Board of Governors of the World Bank Group and the Interna-tional Monetary Fund. At the outset, I would like to thank the govern-ment and the people of the United Arab Emirates for the excellentarrangements and warm hospitality extended to us since our arrival inthis beautiful city of Dubai.

We are particularly concerned that the world economic growth hasnot witnessed satisfactory improvement in 2003. In this context, we urgethe Bank and the Fund to increase the level of assistance to the leastdeveloped countries in order to foster growth and reduce poverty asthese countries are facing both internal and external shocks.

We welcome the World Bank’s initiative to provide grants to thepoorest countries through its IDA window. In this regard, we appreciatethe IDA donors for their generous contribution to the IDA trust fund in2002 and hope that this will significantly contribute in the poverty alle-viation of resource poor countries.

Similarly, we welcome the PRGF, the IMF’s concessional facility forlow-income countries, which is based on country owned poverty reduc-tion strategies. We are of the view that this facility will prove instrumen-tal in fostering economic growth and reducing poverty in low-incomecountries.

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We would like to stress here that the Millennium DevelopmentGoals (MDGs) agreed at the United Nations Millennium Summit,would remain unfulfilled if developed countries do not increase signifi-cantly their Official Development Assistance (ODA). We also urgedeveloped countries to honor the commitments made in InternationalConference on Financing for Development in Monterrey and the WorldSummit on Sustainable Development in Johannesburg in which theyhave stressed the importance of removing trade barriers, increasingassistance and reducing debt burden.

The Heavily Indebted Poor Countries (HIPC) Initiative, launchedin 1996 by the World Bank and the International Monetary Fund(IMF), needs to be further intensified making it more flexible andaccommodative. This initiative although modified in 1999 for deeper,broader and faster debt relief, has been able to provide debt relief toonly 27 countries so far. Other poor debt ridden countries like Nepal arestill outside of this Initiative. If the world community really wants to getrid of debt over hang from the world, the HIPC Initiative should revisitthe criteria and accommodate all debt ridden poor countries. We urgedeveloped countries to contribute more funds for this initiative in orderfor poor countries to pursue sustainable development and reducepoverty.

We believe that trade is vital for accelerating economic growth andpoverty reduction. In this context, Nepal has made all necessary prepa-ration to join the World Trade Organization. We believe that for leastdeveloped countries like Nepal this will be an opportunity as well aschallenge. In this regard, we appreciate the World Bank President,Mr. James D. Wolfensohn, and the IMF Managing Director, HorstKöhler, for their concerns about the Cancun Ministerial Meeting ofWorld Trade Organization. We welcome the two institutions’ commit-ment to assist developing countries to address the short-term adjust-ment problems as a result of joining an open trading environment.

We welcome the initiative for enhancing the voice and participationof developing and transition countries in decision making at the WorldBank and the IMF.

We support better aid donor coordination through better donorcooperation. We commend the World Bank for working with other mul-tilateral and bilateral donors and developing countries to improve theaid coordination through harmonization of procedures in line with theRome meeting of February this year. Nepal has adopted its own ForeignAid Policy in order to harmonize aid procedures and policies. We wantto cooperate with donor agencies including the World Bank in the daysto come to cut the red tape and reduce the development cost throughbetter aid coordination.

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Now I would like to mention about the economic situation of myown country Nepal. The economic performance of Nepal was very dis-couraging in FY 2001/02. During this year the economy contracted by0.5 percent for the first time in two decades due to escalation of theMaoist insurgency, unfavorable monsoon and weak external demand.The agriculture growth rate in FY2001/02 declined to 2.2 percent from5.5 percent in the previous year, and industrial growth fell by 3.3 percentowing to nearly 10 percent drop in manufacturing production. Similarly,tourism was badly hit during this year as arrival of tourist dropped by 40percent resulting in one-fourth decrease in tourism receipts. However,there have been some modest improvements in FY2002/03 as GDPis expected to increase by 2.4 percent with 2.5 percent growth in non-agriculture sector and 2.1 percent growth in agriculture sector. Similarly,the economy has witnessed price stability.

The external sector also has shown some improvements during this timeas export increased by 4.9 percent as against the decline of 15.6 percent inprevious year, while the import increased by 16.9 percent as comparedto the decline of 7.2 percent in the previous year. The BOP remainedstable due to significant increase in overseas remittances and the coun-try’s foreign exchange reserve is sufficient to cover 11 months of mer-chandise imports. The fiscal deficit during FY 2002/03 has been containedat 4.7 percent of GDP as compared to 5.4 percent of GDP in the previousyear. The monetary policy is geared towards the price, exchange rate andfinancial sector stability, and also to spur growth in the economy.

On policy developments, the government has completed the prepa-ration of the Tenth Plan, which also serves as Poverty Reduction Strat-egy Paper (PRSP) of the country, in December last year. The plan aimsto reduce poverty from 38 percent to 30 percent of the population bythe end of plan period in 2007. The plan has adopted strategies of broadbased sustainable economic growth, social sector development, and tar-geted programs for the poor and disadvantaged people, and good gov-ernance. The resource management in the plan will be based on aMedium Term Expenditure Framework (MTEF). To expedite theimplementation of the Reform Agenda as discussed in the Nepal Devel-opment Forum Meeting held in Nepal in 2002, the government has pre-pared and implemented the Immediate Action Plan (IAP) 2002. Theimplementation of IAP has remained satisfactory. In the meantime,FY2003/04 budget of the government, among others, focuses on povertyalleviation and economic reform policy. On financial sector reforms,under the collaboration of World Bank, the government has alreadymade several key decisions including the contracting out of the manage-ment of the two largest public-sector commercial banks and the reengi-neering of the central bank of the country to international companies.

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Despite the government’s serious efforts to turn around the econ-omy, the difficult security situation of the country poses a challenge tous. The government is committed to bringing sustainable peace in thecountry so that economic progress could be achieved for the alleviationwide spread poverty. To this end, I appreciate our development partnersfor their understanding and support. I would also like to mention herethat the government is also committed towards economic reforms asever.

Finally, I would like to thank all the development partners especiallythe World Bank and the IMF for their continued support in the socio-economic development of Nepal.

NETHERLANDS: GERRIT ZALMGovernor of the Bank

The uncertainties in the world economy seem to have diminished,but the turnaround remains fragile. The slow and moderate recoveryreflects the existence of fundamental imbalances that grow deeper thanthe short-term outlook suggests. Among the most prominent examplestoday are the fiscal imbalances we face in the United States, Europe,and Japan. In a similar way that the dot-com hype blinded us to eco-nomic truisms, we now seem to stumble with regard to fiscal policies.The fiscal expansion in the three regions is larger than can be attributedto the economic downturn: structural deficits rise. This might be apainkiller for the short term, but I am convinced that it is no recipe forsustained growth. To unwind global imbalances and to address thebudgetary consequences of ageing, credible consolidation efforts areneeded in all three regions.

In the case of the United States, this will translate in a lower externaldeficit, which reduces the risk of a sudden correction in terms ofexchange rates and capital flows. At the same time, Asian countries thatfinance the U.S. current account deficit will need to play their part byallowing exchange rates to work as a gradual adjustment mechanism.This will also help reduce excess liquidity growth and inflationary pres-sures in their asset markets, which now tend to fuel financial instability.In this sense, an exchange rate adjustment works both ways: it servesnational as well as international goals.

Short-term considerations also seem to dominate fiscal policies inEurope. But again, let us not fool ourselves. Taking a longer-term per-spective, higher structural deficits today will require painful measurestomorrow. The public costs of ageing are, on average, expected to doubleover the next generation. Therefore, an ambitious strategy is needed toput us on the right track: reform of pension systems, enhancement of

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productivity, increases in labor-market participation, and reduction ofpublic debt. With regard to the latter, the budgetary and the debt targetsof the Stability and Growth Pact should be considered a minimum formeeting the budgetary challenges of ageing. With authorities in eachregion doing their homework, we should be able to tackle global imbal-ances and foster global prosperity. To strive after that common under-standing is the basic rationale of the Bretton Woods Institutions, whichare now heading toward their sixtieth anniversary. To underline thatthese organizations are truly global, I very much welcome that theAnnual Meetings are now, for the first time, taking place in the MiddleEast.

The notion of global interdependence was also clearly reflected inthe Monterrey Consensus, which was based on the concept of mutualresponsibility of developing countries and developed countries. Manydeveloping countries have shown, in a transparent manner, theirprogress toward achieving the Millennium Development Goals. Nowwe, the developed countries, need to do the same and be accountable inrealizing our commitments. First of all, our commitment should be tosave the Doha development round after the setback in Cancun. I con-sider Cancun a missed opportunity to enhance the recovery of the worldeconomy and to lift millions of people out of poverty. We have to makea careful analysis of why Cancun failed. I think we did not fully appreci-ate the position and the concerns of developing countries. A betterinclusion of their concerns in the multilateral trading system will givethe system a truly global character.

Apart from trade, developed countries still have an obligation to fulfilthe international target for official development assistance of 0.7 percentof gross national product. Along with increasing aid volumes, we needto improve aid effectiveness. I invite donors to further harmonize theiraid procedures and policies and to improve the coherence of nationalpolicies with development objectives.

Finally, I would like to stress the importance of peace and stabilityfor sustainable development. All of us are aware of the huge obstaclesto reconstruction and development, especially in countries like Iraqand Afghanistan. Wherever a conflict erupts, achievements in thedevelopment process are wiped out, and basic services and institutionsneed to be restored. In the area of conflict, the Bretton Woods institu-tions, the United Nations, and bilateral donors need to intensify theircontributions and cooperation on the basis of their respective man-dates and competences. It is our hope that our common efforts canhelp ensure that countries affected by conflict and instability recoverfrom their predicament. If we work together toward that end, we willall be better off.

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NEW ZEALAND: MICHAEL CULLENGovernor of the Fund

I am again pleased to participate in this meeting. I would like tobegin by thanking the United Arab Emirates authorities for the excel-lent arrangements in organizing this meeting. Multilateral organizationssuch as the Fund and the Bank can make sizable and lasting contribu-tions to many of the problems we face.

Globalization and Trade

Globalization takes many forms. One is from increased flows oftrade, which assist the development of poor countries, emerging mar-kets, and developed countries. Liberalizing trade requires a multilateraleffort, and I express my support for the leadership from the Bank andthe Fund in the public and persuasive statements on trade liberalizationin the Doha round.

The outcome from Cancun was at best, disappointing and, at worst adisgraceful failure of the common will to make essential progress. It willtake time to make gains after losing momentum at Cancun. There is aprofound contradiction in the efforts we make: here, in Dubai, we willtalk about progress towards the Millennium Development Goals; atCancun we retain trade barriers that inhibit growth in poor countries.

Developing countries need support to take advantage of tradeopportunities where they arise, and New Zealand is committingresources to trade-related capacity building and removing supply sideconstraints. However, this work will be wasted unless there is move-ment on trade distortions. Subsidies and quotas lock in constraints totrade and the development of poor countries. There have been calls foran increase of aid of some US$16 billion. This is only 4–5 percent of thetotal spent on agricultural subsidies by the world’s richest countries.

As the finance minister of a small developed nation substantiallydependent on unsubsidized agricultural exports, I find it hard to arguethat my country should greatly increase aid while we, along with theworld’s developing nations, face unconscionable subsidies, along withtariff and non tariff barriers to agricultural trade. Demolition of theserotten structures will increase the incomes of poorer nations and free upresources in the richer ones to increase aid. At the same time, progressmust be made on other issues, such as trade facilitation, which alsostand in the way of international progress and development. A success-ful outcome to the Doha Round cannot and will not be a one-sided one.The next year will tell whether the fine words we utter at these confer-ences about trade liberalization are meant, and will be translated intosubstantial progress, or whether they are merely the cover for the

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continuation of distortionary and unfair trade policies, which ironically,reduce total welfare in both the developed and the developing nations.

Effectiveness and Harmonization

In the Pacific, New Zealand is committed to rationalizing institu-tional arrangements and harmonizing aid programs. However, there arestill issues to resolve in relation to the effectiveness of programs, target-ing of assistance and careful management of partner sensitivities. Weencourage the Bank to move further in this area to assist with harmo-nization, working closely with the borrowing governments and donors.Last year, my Government established a new aid development agencyin New Zealand with a central focus on poverty elimination—NZAID.The new focus is narrower, but deeper.

Small States

Many challenges face our small state development partners in thePacific including isolation from markets, post conflict stress, and diversecultural and social settings. We support the Bank’s efforts to developinnovative approaches to coordinating bilateral and multilateral aidagencies in the Pacific.

Earlier this year, the Solomon Islands Government and Parliamentinvited a regional presence to help restore law and order, and rebuildgovernance structures. We welcome the Bank’s involvement and re-engagement, and believe that it is an important example of the role forthe Bank in the Pacific region. The Bank’s revision of its Pacific Strat-egy in 2004 will be important in setting the future development agendafor the Pacific, and we look forward to increasing dialogue with theBank and our development partners on the revision to the strategy.

Voice and Representation

The representation of members at the IMF and the World Bank iscentral to the credibility of the two organizations. A strong voice fordeveloping countries is fundamental if the Bank is to function effec-tively. Equally, we need to recognize changing relative economicpositions.

Internal Reform

New Zealand is an advocate of the internal reforms at the Bank andthe Fund. We would like to voice our support for the President’s workand the Managing Director’s work in relation to strengthening internal

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governance. However, with this support and commendation comes anacknowledgement that further work is required. We have seen a drift inthe relationship between revenue and administration expenses andgrowth in the transaction costs of doing business with the Bank. Flexi-bility is necessary in the short term, but balance is required over themedium term if the institution is to function well.

Conclusion

New Zealand is a firm proponent of economic, social and environ-mentally sustainable development. As the Fund and Bank work toimprove the development of low income and middle income countries,I congratulate the President and Managing Director on their personalleadership on trade issues. But our sense of frustration is mounting as we see few signs that the gap between promise and performance isclosing.

PAKISTAN: SHAUKAT AZIZGovernor of the Bank

It is a great privilege to address the Annual Meetings of the WorldBank Group and the International Monetary Fund. I also join my col-leagues in expressing my gratitude and appreciation of the excellentarrangements and the hospitality extended to us by our gracious hosts.

It is now more than 18 months since we agreed on the visionenshrined in the Monterrey Consensus. This is the global compact onwhich there was unprecedented unanimity. It provides for an exit strat-egy for the countless millions who have lived in poverty, deprivation,and despair for generations. Both parties to the compact need to imple-ment their part vigorously. Developing countries must continue toimprove their policy framework and governance, while our develop-ment partners need to act, and act quickly, to meet their commitmentsto enhancing the transfer of resources to developing countries throughtrade, and by scaling up the quality and level of official developmentassistance (ODA).

We welcome the aid increases announced by some bilateral donors,and the Bank’s proposal to scale up its assistance to borrowing countrieswith good policy frameworks as extremely positive measures, but muchmore will need to be done if we are serious about achieving the Millen-nium Development Goals (MDGs).

We do not seek permanent financial crutches. We fully understandthat the primary responsibility for providing a better life for our peoplerests with the governments of developing countries. We also recognizethat ODA is a supplement to domestic resources, not a substitute, and

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that we must endeavor to increase these resources. But the magnitudeof the resources needed to achieve the MDGs is such that the support ofour development partners is essential. Not only is global prosperityindivisible, but it should be absolutely unacceptable to human con-science that a substantial proportion of humanity continues to live inabject poverty and without hope. We are running out of time. Morethan just our credibility is at stake. We therefore urge that the U.K. pro-posal to set up an international financing facility be examined by theBank, along with other options to bridge the financing gap in meetingthe MDGs, and that a report be submitted at the 2004 spring meetings.

We are deeply disappointed by the lack of positive outcomes atCancun. Pakistan seeks a level playing field with open access to mar-kets. Agricultural subsidies in the Organization for Economic Coopera-tion and Development create distortions that negatively affect efforts ofdeveloping countries to achieve agricultural growth and obtain a highermarket share of agricultural exports. We now need to look ahead andpursue upcoming negotiations with renewed vigor and resolve. It will betrade, not aid, that will ensure sustainable reduction in poverty.

There is no doubt that economic growth has to be the center of ourattention as the most effective and sustainable means of reducingpoverty. However, sustainable growth itself is largely a function ofinvesting, on the basis of a country’s own capacity and priorities, in pro-grams that are truly home-grown. Ownership is the key and can beensured in several ways. First, it is critical that donors’ support be builtaround genuinely home-grown poverty reduction strategy papers(PRSPs) and development strategies. Secondly, it is essential that thequality of aid be scaled up and that micro management and transactioncosts be reduced.

The substantial progress achieved in implementing the EnhancedHeavily Indebted Poor Country (HIPC) Initiative is indeed welcome,but debt sustainability is an issue that is much larger. We also need tofocus on the unsustainable debt burdens of the non-HIPC countries thathave credible macroeconomic and structural reform programs but thatare unable, because of their debt overhang, to raise resources to financehuman development and badly needed infrastructure. Debt relief willgive them the required fiscal space.

We welcome the Bank’s renewed focus on infrastructure after morethan a decade. Timely implementation of the Bank’s InfrastructureAction Plan will take us closer to the MDGs more rapidly and removeconstraints to long-term economic growth, productivity, and povertyalleviation.

Monitoring is a crucial aspect of results-based development. Wewelcome the focus on this critical issue. However, monitoring shouldnot become an end in itself. The real issue is effective follow-up,

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implementation of remedial measures, and reinforcement of accountabil-ity for results. The design of the monitoring framework should be coun-try-specific, consistent with capacity, and fully harmonized among donors.

The issue of enhancing voice is a complex one. We are, however,quite clear in our minds as to what this issue entails. To us, it is the abil-ity of developing countries to influence the design and content of theinternational development agenda, the international financial architec-ture, and the operations of donors in their respective countries. Weagree that the issue can be addressed effectively only by a comprehen-sive package of measures. We note that some capacity-building measureshave been taken, and others are in the pipeline. Although structuralissues are more difficult to address, given trust and understanding, thereis no reason that we should not be able to make progress. It will alsorequire a sharp focus on genuinely home-grown development and struc-tural reform agendas.

Enhanced voice will lead to greater ownership and improved devel-opment effectiveness. We need to be innovative in exploring other pos-sible avenues of enhancing voice, such as joint meetings of the Group of11 and Group of 7 prior to the Bank-Fund spring Annual Meetings. Weneed to continue our dialogue and to work toward the objective of a fairand balanced global economic order.

Pakistan, as a frontline state in the fight against global terrorism, hashad to face daunting challenges in the post-9/11 period. However, ourresolve to continue with structural, macroeconomic, institutional, andgovernance reforms has not wavered despite several exogenous shocks.The results at the macroeconomic level are evident in a stable currency,low inflation, improved levels of foreign exchange reserves, a decline infiscal deficit and public debt as a proportion of gross domestic product,a booming stock market, and better-than-targeted growth.

However, the biggest challenge before us, as indeed before the policy-makers of other developing countries and their development partners,is to translate structural reforms and stable macroeconomic frame-works into strong, broad-based economic growth. People now anx-iously await benefits from the sacrifices they have made over the pastseveral years to support macroeconomic stabilization and structuralreform. If we fail to deliver results, there is a risk that reform fatiguewill set in and threaten the achievements of the past years. This risk wecannot afford.

We are at the threshold of a new era. Our people look at us withgreat expectations. They look forward to a new dawn that enables themto prosper in peace and to move out of the poverty that has blightedtheir lives, shackled their energies, and condemned them to a subsis-tence living. They look to us to deliver our promises, and to deliverthem from the multidimensional poverty in which they are mired.

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Coming generations will judge us for our wisdom, or its tragic absence.Global progress is at stake. We cannot and must not fail. Let us reachout and seize the opportunity while it lasts.

PALAU: CASMIR REMENGESAUGovernor of the Bank

(on behalf of the members of the Federated States of Micronesia,Kiribati, Marshall Islands, Palau, Solomon Islands,

Samoa, and Vanuatu)

I am very honored to address the 2003 Annual Meetings of theInternational Monetary Fund and the World Bank Group on behalf ofthe members of the Western Pacific: Kiribati, the Republic of theMarshall Islands, the Federated States of Micronesia, the Republic ofPalau, Samoa, the Solomon Islands, and Vanuatu.

Let me begin by saying that the new millennium has not, as yet, beenkind to the development aspirations of our Pacific island countries.Beginning with the Asian crisis leading into the new century, we havefaced, sequentially, the impacts of the U.S. stock market crash, theevents of 9/11, the war in Afghanistan, the Iraqi war and the SARS out-break, along with other regional events.

While these worldwide events certainly affected all of the people ofthe world, they were particularly challenging to our small island nationsdue to our small size, our dependence on tourism, our vulnerability toexternal shocks, natural and economic, and our one-dimensionaleconomies. These negative impacts are a mere reflection of muchbroader and very unique development issues, including a very limitedrange of natural resources, significant isolation from major markets,substantial impediments to developing trade and industry, limited man-power and technical capacity, and a limited number of legitimate devel-opment options. Because of these limitations, our economies havegrown at a rate of less than 1 percent over the past 30 years. Unfortu-nately, this economic growth has not kept pace with a correspondingpopulation growth of over 3 percent during the same period.

This is reflective of the difficult task faced by both the internationalcommunity and the governments in the Pacific, to find effective solu-tions to encourage private-sector growth. It is also reflective of the lim-ited role of the Bank that has not allowed it to fully engage in the Pacificwith a broad spectrum of programs and funding opportunities. Wetherefore look forward to a new “Pacific Strategy” for our region andare hopeful that the upcoming Bank Country Assistance Evaluation(CAE) will recognize that, as full members of the Bank, full Bank serv-ices must be provided.

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This new Pacific strategy must include a commitment of people andfunding if it is to find success. This expanded involvement must firstsupport the productive sectors, including fisheries, agriculture, tourismand light industry. It must also focus on public sector expenditure man-agement. In order to strengthen the mid levels of the public sector thathave become weakened and are a key to better service delivery andproject management, it must support civil service adjustment. Above allthe strategy must recognize that past lending support has been too lim-ited and that such funding access is primary to the development of amodern infrastructure. Finally, the strategy must be all embracing,taking into account the differences in the sizes and the types of nationsin the Pacific as well as the broad development needs and processes inthe Pacific.

Over the years, many studies of our unique economies have beenundertaken by the World Bank and the IMF, as well as other regionaland international organizations. While we appreciate this assistance tobetter define our needs, we believe that it is time to move forward andestablish stronger and more diverse practical programs and fundingmechanisms that will allow our private sector to expand at every level.This requires better donor coordination and harmonization to betterdefine the role of the Bank and the Fund in the Pacific in relation toother regional donor organizations. It also requires greater localrecruitment in projects to ensure future continuity.

Within this context, the special circumstances of small states mustcontinue to be taken into account by our development partners. For theWorld Bank, this should entail a continuation of a flexible approach tothe graduation of small states from concessionary financing. On behalfof the Pacific constituency, I ask that the small state exception in termsof IDA eligibility that was negotiated under IDA 13 be continued inIDA 14.

We also look forward to a more widespread participation by the IFCthrough both its central office and the South Pacific Project Facility(SPPF), now known as the Pacific Enterprise Development Facility(PEDF). The SPPF was a prime example of the Bank’s excellent on-going efforts to bridge the gap between capacity building and the devel-opment and financing of private sector projects. Through fine andenergetic staff work, the SPPF has brought greater business insight tothe Pacific region, and for this we are grateful.

However, we are concerned that the new operational strategy forPEDF as articulated during the recent donor’s meeting will diminish theeffectiveness of IFC’s engagement in the Pacific. Rather than expandingprograms and funding opportunities, there has been a move toward anaggressive approach to the application of fees in those instances where

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these are still charged. In addition, greater focus on cost containment hasresulted in significant changes in representational and consulting activity.

While we appreciate this concern over costs, we fear that the originalvision of SPPF is being lost in the roll out of the new PEDF. That visionincluded not only the upgrading of business skills and planning capabil-ities, but also indirect and direct funding of private sector projectsthrough the IFC’s Pacific Island Investment Facility. In this regard,rather than receding and retrenching, we would request that the IFC,through both the PEDF and its central office, move forward with evengreater vigor and vision. This means that we must be creative in identi-fying and making available valid alternatives to domestic commercialinstitutions; avoiding duplication of services by donor organizations;and building on success models in the Pacific region.

Clearly, sustainable development is the only viable window into abright future for the countries in the Pacific region and, for that matter,in the world. Such development requires a two-pronged approach thatfocuses on both technical capacity and access to capital markets. Wetherefore offer our thanks to the Bank and the Fund for their expandedinvolvement in the Pacific region over the past five years. Thisenhanced participation in our efforts to develop has continued to focuson technical capacity. We therefore further extend our gratitude to thePacific Financial Technical Assistance Centre (PFTAC) located in Fijifor its efforts to improve our tax policies, governmental statistics andour overall financial systems.

Within the context of this generous assistance, we are ready and will-ing to make the hard decisions and institute the necessary reforms thatwill permit the success of these initiatives. In fact, we have, over the lastdecade, made great strides in expanding our capacity, strengthening oureconomic management and improving our institutional environmentthrough a broad variety of legislative and administrative reforms. Werecognize that good governance is just as important as capacity andgood projects and we will continue to work diligently to improve in thisarea.

In the area of trade, we are proud to announce the entering intoforce of two regional trade agreements, PICTA and PARTA, eachwhich will require expanded technical capacity and which should even-tually lead to expanded trade opportunities and a reduction in the costof engaging in international trade. We appreciate the advocacy roleplayed by the World Bank and the Fund in the area of trade and wouldcontinue our request for assistance in the implementation of our pro-posed Regional Trade Facilitation Program. In like manner, we are movingforward in our efforts to enact law enforcement and banking legislationto combat money laundering under our own Honiara Declaration, as

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well as establishing a regional framework, including model legislation,to address terrorism and transnational organized crime.

Recognizing that Small Island Developing States (SIDS) areuniquely vulnerable to global weather events, the Pacific Islands havemoved rapidly to identify and implement a wide range of adaptationoptions and are committed, with your able assistance, to be proactive inthe development of appropriate, affordable and cost-effective adapta-tion response measures. We therefore extend our sincere appreciationto the Bank for its generous co-sponsorship and co-organization of theSecond High Level Adaptation Consultation and Third Climate ChangeRoundtable held in Fiji, which led to an agreement on a RegionalAdaptation Funding facility for our islands. We also see great opportu-nity to deal with climate variability and the risks of sea level risethrough the vulnerability and adaptation Pacific Type 2 Initiatives thatwere launched at the WSSD and would seek assistance in the identifica-tion of partners and implementation of initiatives.

This being said, we recognize that the impact and effectiveness ofour domestic efforts to respond to a global crisis created by our devel-oped partners are limited. We therefore renew our call for urgent actionto be undertaken to reduce greenhouse gas emissions and for there tobe further commitments in the future by all major emitters. We alsocontinue to call for the ratification of the Kyoto Protocol under the UNFramework Convention on Climate Change (UNFCCC).

On the broader issue of sustainable development, we would call forour international partners to live up to the principles of Agenda 21, asagreed upon by all of us during the Earth Summit in 1992, by fulfillingour agreed upon obligations as augmented by the Millennium, Doha,and Monterrey Declarations. We would also seek support in preparingfor the Ten Year Review of the Barbados Program of Action. In ourefforts to bring about sustainable development, we strongly support theGlobal Environment Facility (GEF) and the active implementation ofsmall grant schemes to promote grass roots initiatives in our countries.If we are to achieve the Millennium Development Goal of halvingpoverty by 2015, such grant schemes, along with other grant and con-cessionary loan schemes must be expanded.

The nations of the Pacific have demonstrated their support for theSolomon Islands during its difficult period of reconstruction throughthe Biketawa Declaration. Our leaders have welcomed the signingof a multilateral agreement to support the Regional Assistance Missionto Solomon Islands (RAMSI) in order to address law and order andthe economic situation in the country. We note with great pleasurethe action of Australia in clearing the Solomon Islands arrears withthe World Bank and the Asian Development Bank. In this vein wewould seek the assistance of the Bank and the Fund to assist in the

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reconstruction of the country and to actively seek ways and means toalleviate its debt burden.

This multilateral approach, with the assistance from the Bank and theFund, as well as other international institutions, must also be applied tocombat HIV/Aids in our region. We commend the Bank for its commit-ment to fight this deadly disease worldwide and we welcome your on-going support for the Global Fund for Fighting Aids, Tuberculosis, andMalaria.

Finally, I would like to express our deep and sincere appreciation tothe staff and management of the Bank and the Fund for the tirelessefforts on behalf of the Pacific Islands. We recognize that the world’sresources are limited and that the provision of aid to every region in theworld must take this into account. We only seek our fair share of suchresources. We are ready to do our part to improve and expand ouropportunities and to work with you on our road towards sustainabledevelopment.

PAPUA NEW GUINEA: BART PHILEMONGovernor of the Bank

I am pleased to be at my second joint annual meeting of the Interna-tional Monetary Fund and the World Bank. This meeting provides animportant forum for engagement not only with the International Mone-tary Fund and the World Bank Group, but also with other developmentand financial agencies.

Let me also commend the government and people of the UnitedArab Emirates on their hospitality and organization. The organizationof this meeting has been superb and every detail well attended to. Fur-ther, I laud the efforts of the leadership of the United Arab Emirates tomake their country a hub for international commerce, economy,finance, and tourism. I will certainly take time to study how the UnitedArab Emirates has used its oil and gas income to spur sustainablegrowth in the other sectors of the economy.

Papua New Guinea continues to be mired in a growth trap. Ourefforts to reinvigorate broad and sustainable growth have been assistedby favorable external conditions, particularly in relation to our exportcommodity prices. However, the risks to the economic outlook remainconsiderable. Papua New Guinea is now a net external loan re-payer,our expenditure budget has become locked into a yearly cycle of unpro-ductive expenditure, and our resource envelope is being graduallyeroded over time as a result of an economy in recess and a trend declinein mineral and oil production.

The Papua New Guinea Government recognizes the very significantchallenges that lie ahead over the medium term. These are challenges

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that we cannot confront alone, and we look to our development partners,both the international financial institutions and our bilateral partnersfor assistance.

The systems of governance in Papua New Guinea are sound androbust. The weaknesses are not systemic in that they are a natural prod-uct of the system but rather reflect the weaknesses in our accountabilityframework. Transgressions on the part of politicians and bureaucratsare not being punished, and this reflects in part two key things. The firstis the politicization of the system, especially in bureaucracy and theinstability of the political leadership.

We are taking measures to restore confidence in our systems of gov-ernance. The introduction of the landmark Integrity of Political Partiesand Candidates Act in 2002 will ensure that there will be far greaterpolitical stability in Papua New Guinea over the next five years. Theproposal to increase the period to move a vote of no confidence in agovernment from 18 months to 36 months will not only further buttresspolitical stability, but also provide a stable and consistent environmentfor implementation of economic and social policies. This will also facili-tate sounder and more stable macroeconomic management.

We are rebuilding a public sector that is professional, has integrity,and is committed. The first phase of the reform involved building aperformance-oriented public service, reorienting personnel manage-ment systems and processes, strengthening probity and oversight agen-cies, and improving delivery of major services.

Further reforms include instilling an appointment process that is de-politicized and merit-based. Legislative amendments have been intro-duced that compel all vacant positions of the heads of nationaldepartments and provincial administrations to be advertised. This willgo through an independent screening process before a shortlist is sub-mitted to a ministerial committee to further consider before the cabinetmakes an appointment. These reforms are also being extended to coverthe appointment of heads of statutory agencies as well.

Wider consultations have taken place in the preparation of theNational Poverty Reduction Strategy and the 2004–2007 Medium TermDevelopment Strategy for Papua New Guinea. The Poverty ReductionStrategy has been informed by a participatory poverty assessment exer-cise, and it is very clear what the people deem crucial for enhancementof their lives—transport infrastructure and water are the top two prior-ities, followed by key services such as primary health care and basiceducation.

Formal consultative mechanisms exist for engaging with civil societyorganizations. There is the Consultative Implementation MonitoringCommittee, the Public Sector Reform Advisory Group, the Impedi-ments to Business and Private Sector Working Committee, and the

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National Development Forum. These are all forums that allow privatesector, nongovernmental organizations and community-based organiza-tions to have a say in and input into government’s policy.

Projections of key financial indicators underpinning the 2003 budgethave deteriorated in large part due to budget financing difficulties relat-ing to delays in receiving the proceeds of asset sales and the carry-overof 2002 expenditures into 2003.

The changes in economic indicators, including inflation and interestrates, has exerted immense pressure on the 2003 budget. To offset theinterest bill, the non-interest expenditures have had to be adjusteddownward, and we remain firmly committed to achieving a fiscal deficitoutcome equivalent to 2 percent of gross domestic product (GDP) forthis year.

A tightened fiscal stance has supported independent monetarypolicy with the result that the exchange rate has stabilized and interna-tional reserves have been rebuilt over 2003. Inflationary pressures arestarting to subside but the government recognizes that the economic sit-uation remains fragile and that the high interest rate regime will remainin place for some time yet.

The Medium Term Fiscal Strategy and its accompanying FiscalFramework represent an important departure from the past practice ofsingle-year budgeting. The strategy compels the government to beproactive and to respond in a measured way to changes in projected rev-enue flows and expenditure requirements. The expenditure prioritiesunder the Medium Term Development Strategy are basic education, pri-mary and preventive health care, transport infrastructure maintenance,law and order, rural development, and poverty alleviation through gen-eration of income-earning opportunities for Papua New Guineans.

The government has established a formal process to facilitatedetailed strategic review and rationalization of the expenditure budget.This commenced with a detailed agency-by-agency review of the 2002budget submissions. The work will continue in 2003 in relation to the2004 budgets. I am leading this ongoing strategic review, along with asmall group of central Economic Ministers. Our work is being sup-ported by a detailed and technical Public Expenditure Review andRationalization (PERR) exercise supported by the World Bank, theAsian Development Bank, and the Australian government. It isintended that the PERR exercise will allow further structural adjust-ment of the budget to facilitate greater focus on PNG’s importantmedium development priorities.

In addition to the fiscal adjustments, the government will press for-ward with reforms to address the structural constraints within theeconomy, as well as institutional reforms to instill good governance andimprove efficiency within the public sector. The government will

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continue to support ongoing governance measures, and these includestrengthening probity and oversight agencies, strengthening governmentprocurement practices and procedures, improving debt management,liberalizing investment and promoting private sector participation, andreviewing the current privatization process to ensure that proper proce-dures are adopted and that clear net benefits to people of Papua NewGuinea can be demonstrated.

The government remains committed to the broader policy of privati-zation. Privatization of non-core assets will proceed since these assetscontinue to be a drain on the national budget and act as a constraint onthe private sector. Papua New Guinea suffers from both poor servicestandards in core infrastructure areas and a severely limited reach ofthese services. The full privatization of core assets is unlikely to addressthese issues in the short term but will yield benefits in the medium andlong term. First, privatization will strengthen integrity of institutions ofstate. Second, it will strengthen the national budget by ending the needto meet the ever-increasing losses and debts of government-owned busi-nesses, and it will allow the government to focus expenditure on provi-sion of basic services such as health, education, and transport. Finally, itwill enhance the ability of the government to use proceeds to retireshort-term domestic debt.

To tackle corruption, progress has been made through the strength-ening of probity and oversight agencies. The government will continuethese reforms, including development of action plans for strengtheningthe Department of Attorney General and the Inspections Division ofthe Department of Treasury. In addition, criminal activity will be tar-geted under the MTDS with law and justice identified as an expenditurepriority.

I share the dismay at the breakdown of the Doha Round in Cancunand the danger it poses to further trade and services liberalization. I callon both the advanced and developing countries to restore and advancethe round for the betterment of citizens of the world and particularly fordeveloping nations.

Papua New Guinea has embarked on a comprehensive trade liberal-ization program, and my government remains committed to it. The gov-ernment has announced a tariff review in response to demands fromsections of the Papua New Guinea business community. An indepen-dent task force will report back to Government before November 2003.It is worthwhile to note that our tariff rates are well below the WorldTrade Organization agreed bound rate, and upward adjustments are notbeing considered at this point in time.

In closing let me affirm my government’s commitment to advancingstructural reforms that will yield growth dividends for our economy.Restoring good governance remains one of the central planks of the

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government’s objectives, and we will re-intensify our efforts to confrontthese difficult challenges.

Looking forward, we welcome the Fund and the Bank support as weface the difficult challenges over the medium term.

PARAGUAY: JOSÉ ERNESTO BUTTNER LIMPRICHGovernor of the Bank

I would like to commend the government of the United Arab Emi-rates and, in particular, the authorities of Dubai for their impeccableorganization of this event and for the hospitality of their people.

A new government assumed office in the Republic of Paraguay lastAugust 15. This new administration is facing difficulties in both the eco-nomic and social spheres, due largely to structural problems that haveplagued the country for several years. However, from the outset, thenew government has demonstrated commitment to fostering nationaldevelopment. To that end, it has begun to appoint top-ranking profes-sionals at the most strategic levels in the different areas of government.

From an economic standpoint, underlying the strategic vision of thegovernment are the following key elements:

• restoration of trust in state institutions;• sustainable economic growth, coupled with social, fiscal, and environ-

mental responsibility;• reduction of poverty and social inequality; and• civil society participation.

To that end, the executive is working with the National Congress toachieve passage of important laws such as:

• the law on Administrative Restructuring and Fiscal Overhaul, whichseeks to reduce public expenditure and distortions in the tax law,thereby increasing efficiency in the allocation of resources, reducingdistortions, and providing the tax administration with improvedpolicy instruments;

• the law on Streamlining of the Employee Fund Association (the insti-tution that administers the retirement funds of public employees andmakes adjustments to financial parameters), which will lead toenhanced medium- and long-term financial sustainability;

• the law approving the Customs Code, which will pave the way for sig-nificant improvement in current procedures by simplifying processesand strengthening the customs administration;

• the law reforming Public Banking, which is aimed at restructuringseven public financial institutions and transforming them into one

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second-tier financial institution that facilitates long-term financingand a first-tier institution that channels loans largely to the ruralsector and micro enterprises.

• the law on Fiscal Responsibility; and• the Deposit-guarantee Law of the financial system.

In the context of the macroeconomic performance of Paraguay,mention should be made of a number of weaknesses, such as negativeeconomic growth in 2002 and an increase in the debt to gross domesticproduct ratio. The latter is due largely to the steep devaluation of thelocal currency in recent years. In 2003, we hope to reverse this trend andto achieve positive economic growth of close to 1.8 percent and a levelin excess of 2 percent in 2004. Inflation, which stood at 14.6 percent in2002, will fall to below 10 percent this year and next.

Following last year’s crisis, the banking system has returned to astate of normalcy, with the almost complete recovery of the depositsthat were lost during the period of instability. Moreover, internationalreserves have increased by one-third in relation to last year, and currentlevels are making it possible for the central bank to control foreignexchange policy more efficiently.

In the fiscal area, a budget deficit of only 0.4 percent of GDP isexpected in 2004; this figure is below the estimate of 2.2 percent for thisyear. The figure is based on a reduction in public expenditure, improvedadministrative efficiency, and an increase in tax revenue. In the mean-time, the initial effects of short-term measures are already evident,given the fact that tax revenue increased 32 percent during the month ofAugust 2003, compared with August 2002, and 70 percent during thefirst half of September compared with the first half of September 2002.

Without a doubt, international cooperation is of critical importancefor the success of the measures mentioned above and for the achieve-ment of sustainable economic growth. To that end, the government isnegotiating several agreements with various international organiza-tions. If accompanied by an appropriate level of financial resources andtechnical assistance, these agreements will facilitate implementation ofall the measures envisioned by the current administration of Paraguay.

Paraguay, a small landlocked country whose economy revolvesmainly around the agricultural sector, relies heavily on internationalmarkets for its development. For this reason, we view rapid progress atthe international level in the reduction of trade barriers, particularlythose in the agricultural sector, as well as a reduction in the distortionscreated by the application of protectionist policies, as essential.

We view with optimism and we support the initiatives of the Devel-opment Committee to forge ahead with discussions aimed at enhancingthe voice and participation of developing countries. Progress in this

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area will make it possible for the Bretton Woods institutions to offermore effective solutions to the real needs of our countries.

Once again, we would like to thank the authorities and people ofDubai for their excellent organization of these Annual Meetings. Weare confident that the discussions will lead to progress in the implemen-tation of better and more effective policies aimed at development andthe achievement of equity in countries.

PHILIPPINES: JOSE ISIDRO N. CAMACHOGovernor of the Bank

We are meeting here today as member countries of the World Bankand the International Monetary Fund to assess how much we haveachieved during the past year and map out our agenda for the next year.

Since our meeting last year, the world economy has been rocked byinitial reversals and subsequent advances. Our poverty reduction effortshave suffered reversals from uncertainties of the global environment—induced by the Iraq war, the SARS epidemic and the continuing threatof terrorism. However, through coordinated action and with the help ofthe UN system, including the Bank and the Fund, we have been able toweather the negative impacts of these events. Efforts have also been ini-tiated to bring to light the objectives of the Monterrey Consensus. Weare now forging ahead with other agenda items in implementing ourpoverty reduction agenda for the future.

Several important issues confront us today. First, is the issue ofvoice. In Monterrey last year, we had decided that the World Bank andIMF would continue to enhance the participation of developing andtransition economies in decision making as they address the develop-ment needs of these countries. In spring earlier this year, the Develop-ment Committee reaffirmed this decision, and initial action has beendone to strengthen capacity in executive directors’ offices in the Bankand the Fund.

This coming year, we should look at more straightforward options togive developing countries the voting strength in accord with their realshare in the world economy. With a fairer share in voting strength,developing countries are better placed and more equipped to useopportunities to present their views and advocate issues in line withtheir interests.

Both the Bank and the Fund have moved far from their joint begin-nings in Bretton Woods. The world since then has also changed. I wouldlike to commend the Bank and the Fund for their genuine resolve tolisten harder to what their clients need and want. The Bank is in theforefront in poverty reduction, and we sincerely applaud the many ini-tiatives and strategies that it designs. We especially commend the

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Bank’s continuing policy in devolving more functions to its decentral-ized offices. Complementing the decentralization policy is the establish-ment of “knowledge development centers,” as piloted in the Philippines.These centers are a boon to those who thirst for information and knowl-edge. These and the many innovative programs of the World Bank arevery much appreciated by the constituent countries.

These two venerable institutions now appreciate that economic andfinancial stability and development cannot be achieved through text-book prescriptions, nor can they be attained from the perspective offunctionaries who are far removed from the on-the-ground and day-to-day realities. There is now recognition that no one formula works everytime for everybody, and there is need to differentiate countries on thebasis of their political, cultural, social, and economic situation. Wesalute them for this growing open-mindedness.

Second, we want to go full steam with the creation of “an open, equi-table, rules-based, predictable and nondiscriminatory multilateral trad-ing and financial system.” We have embraced trade liberalization andopened our markets sacrificing even much-needed fiscal resources.However, the impact of our efforts is blunted by the trade agendaremaining stuck on the issue of subsidies and QRs in developed coun-tries on major products of export interest to developing countries, andthus the standoff in Cancun.

Third, we are concerned by the decision to veer resources away frommiddle-income countries to low-income countries, depriving the poor-est of the poor in middle-income countries of their rightful share inresources. While it is true that middle-income countries now havehigher per capita incomes relative to low-income countries, middle-income countries continue to have many pockets of poverty, in manycases, extreme poverty, which are masked by measurement of averages.How different is a starving and homeless person living in a middleincome country from a starving and homeless citizen of a very poor andlow-income country?

Furthermore, many middle-income countries face fiscal and finan-cial constraints. For this reason, it is imperative that creative and lessfiscally burdensome financial assistance be packaged for middle-incomecountries so that governments can more effectively use these facilitiesand advance their development agenda. We look to the Bank and theFund to lead in the efforts at creatively reducing the debt burdens of themiddle-income countries.

How can the MFIs be more relevant today? How can the MFIs pro-vide value added inputs and be better appreciated by client countries?Let the MFIs be less preachers and be more problem solvers as theWorld Bank has so effectively done for us. In many instances, we arebombarded with diagnostics of our problems and deficiencies. For the

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most part, we, the authorities, already know these problems and defi-ciencies. We are there on the ground to face the hungry, the homeless,the uneducated, and the unemployed members of our society. We donot need to be constantly reminded of our problems because we facethem every day. We need to be aided and guided to find practical solu-tions to the problems! We are also concerned with the fact that somemultilateral institutions at times behave more like credit rating agen-cies, that is, establishing public scorecards for client countries. We donot belie the need for countries to perform and to institute measures toachieve efficiency, effectiveness, and good governance, but we findcounterproductive the “credit rating mentality” of some of the MFIs,which constantly highlight the negatives of our economies. This under-mines the confidence-building exercises that many countries assidu-ously pursue to gain support, unity, and credibility domestically andinternationally and makes our jobs more difficult than they already are.

Last year, I had strongly supported the initiatives for harmonizationof the procurement and financial management of the major lendinginstitutions. Sad to say, in spite of the high level discussions in Romeearly this year on harmonization, little progress can be seen in this area.We again call for a speedy resolution to the harmonization issues.

With these thoughts, I sincerely hope that we can all work togetherin meeting the challenges before us.

POLAND: RYSZARD MICHALSKIAlternate Governor of the Fund

Let me begin by congratulating Mr. Villiger on his very effectivechairmanship of our annual discussions. I would also like to thank ourhost, the United Arab Emirates, for its hospitality and the excellentorganization of the meetings. I find it extremely important and encour-aging that at this particular time, we can meet in this part of the world,and in a very peaceful atmosphere, in order to conduct the ordinarybusiness of the Bank and the Fund, assess our achievements and fail-ures and look for ways to make the Bretton Woods institutions workbetter for the benefit of all member countries.

Our meetings take place at a very important time for the countries intransition. This concerns in particular the group of eight Central Euro-pean and Baltic countries that, together with Cyprus and Malta, willbecome members of the European Union on May 1, 2004. It is not easyto precisely define the end of the transition process but I believe that atleast for this group of eight countries, it would be fair to declare that thehistoric undertaking of dismantling the command economy system isnearing a very successful completion. It has been achieved in a reason-ably short time, in a very peaceful manner and without any major social

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disruptions. Many of the remaining transition countries in Eastern andSouthern Europe are also very well advanced in establishing strong,market based economic systems. A special feature of the Europeantransition countries is their strong commitment to transparency. In thisrespect, they are already on par, and in some respects even exceed, thestandards of the industrial countries. Most of the CIS countries are alsomaking strong efforts to reform their economies and even if the overallprogress has been more mixed, they have been recently recording, onaverage, very solid growth rates and made significant advances inmacroeconomic stabilization. However, several of the smaller CIScountries still suffer from various structural rigidities, very high debtburdens, and are afflicted by widespread poverty. These countriesdeserve continuous attention and support from the Bretton Woodsinstitutions as well as from bilateral and international donors.

The Bank and the Fund have contributed significantly to the suc-cessful advancement of the transition process. The EU accession coun-tries are one of the few examples of a relatively fast graduation from theFund’s financial support. They now enjoy an almost unrestricted accessto the international capital market on fine terms. Despite the very sub-stantial progress already made by Poland and other countries accedingto the EU, we are still very interested in maintaining active cooperationwith the Bretton Woods institutions. The Fund and the Bank shouldcontinue providing their support in order to ensure that our countriesfully benefit from increased integration with our future EU partners.The Fund would be welcome to offer its advice on the conduct of mon-etary and exchange rate policies in the period before the adoption ofthe euro and on the design of comprehensive fiscal reforms. Both insti-tutions could help in strengthening our financial systems and increasingthe efficiency of public expenditures, and the Bank could still play auseful role in financing some of the infrastructure and structural reformprojects.

Poland fully supports the objectives set out at the Monterrey andJohannesburg conferences and sees the need to redouble the efforts ofall parties concerned to ensure the timely achievement of the Millen-nium Development Goals. The low-income countries themselvesshould lead in this process, but the Bretton Woods institutions, otherinternational organizations and all bilateral donors should also enhancetheir support. The PRSP-based approach is already showing somepromising results and should be further expanded and perfected. Moreattention should be paid to achieving higher standards of governance inlow-income countries as it would help strengthen credibility of thewhole PRSP process, improve the quality of the dialogue with all stake-holders and enhance ownership. The PRSPs should set realistic targets

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and ensure the availability of adequate tools for measuring the progressin achieving these objectives.

Despite all the criticism and skepticism, the HIPC Initiative is alsoprogressing quite well. Further strong efforts should be made to ensureits completion. This requires, among others, ensuring the full financingof the Initiative and securing adequate participation of all creditors.First and foremost, however, the beneficiary countries should showtheir full commitment to meeting both the objectives and the conditionsof the HIPC Initiative. Poland has already provided a sizable contribu-tion to the HIPC-PRGF Trust Fund and proposed a significant reduc-tion of its claims on the HIPC countries. We believe, however, that inorder to ensure the fullest possible participation of all creditors, notonly the debtor countries themselves should more actively seek thecooperation of all of their non-Paris Club creditors, but also these cred-itors should be given more say at deciding on the scope of and themechanisms for providing the HIPC debt relief.

PORTUGAL: MANUELA FERREIRA LEITEGovernor of the Bank

I will begin by thanking the Dubai authorities and the governmentof the United Arab Emirates for their warm hospitality and excellentsupport in organizing this year’s Annual Meetings. These are the firstAnnual Meetings ever to take place in the region, and I would like tostress that fact’s importance and meaning in terms of a further, deeper,and successful integration of the Middle East, in general, and the Gulf,in particular, into the world economy.

Macroeconomic prospects

In assessment of the world economic situation, there is consensus thatgrowth is getting under way and that during 2004 it will gather momen-tum on the basis of better economic conditions. This should also be thecase for the European Union, in which overall conditions seem to be met.

Our task as international community should be to avoid some down-side risks to materialize and thus to contribute to a stronger andbroader-based global recovery.

Particular attention should be paid to support of an orderly correc-tion of imbalances, including by means of allowing some smooth andfairly shared exchange rate adjustments that better reflect economicfundamentals. This implies that our countries should be ready to con-tinue their efforts to deliver sound macroeconomic policies and pursuestructural reforms.

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Finally, a balanced agreement, as soon as possible, within the DohaDevelopment Round would be of major importance. It would strengtheninternational trade and could foster confidence in and support an over-all recovery.

Economic and budgetary developments in Portugal

Confidence is the major force behind recovery. Under such circum-stances, it is crucial that macroeconomic policy proves to be credible,thus supporting expectations. And credibility is gained through the abil-ity to stick to commitments. This has been our position in Portugal.

We have recently experienced an important and unavoidable adjust-ment from a past unbalanced growth path, which was aggravated byinappropriate budgetary policies. Therefore, the Portuguese economywill register a slightly negative growth rate in 2003.

This year’s slowdown reflects mainly the weakness of domesticdemand, which was an inevitable development to correct macroeco-nomic imbalances, but also a subdued external demand.

Signs of improvement of domestic demand, although recent, areappearing, and technically the economy is no longer in recession. Amild recovery is expected in 2004, and the growth rate is expected to bebetween 0.5 and 1.5 percent.

Regarding budgetary developments, the Portuguese government isfully engaged to comply with the rules of the Growth and Stability Pact,in spite of the economic slowdown. This commitment is the result notonly of willingness to comply with international obligations; it owesmainly to the government’s belief that budgetary consolidation bestserves domestic economic needs.

As for structural reforms, it is worth mentioning the approval of anew labor code, which increases the flexibility of labor relations, andsteep reforms undertaken in sectors such as civil service, education,health, and social security.

International financial institutions agenda

As for global efforts to fight poverty, challenging times in economicand social terms shall not be an excuse for developed countries to delayor soften their responsibilities. If anything, priorities should becomemore focused and directed at maximum effectiveness.

In this context, we welcome the significant results that the HeavilyIndebted Poor Countries (HIPC) Initiative has achieved. However,countries need to do much more, such as improving domestic policiesand governance, so they can benefit from the full implementation of theinitiative.

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We are also of the opinion that the Millennium Development Goalsmust continue to provide the major frame for our action, whereas theproposal for launching an International Finance Facility deserves fur-ther preparatory work.

As for strengthening the fight against the abuses of the internationalfinancial system, we fully endorse the 40 Financial Action Task Forcerecommendations on money laundering, which is an area in which thesuccess of our action is highly dependent on strong coordination, bothamong domestic institutions and at the international level.

Finally, I would like to welcome the progress made to improve crisisprevention and resolution. Of course, this is an almost never-endingtask. Efforts should continue to be made to improve the surveillanceframework and to ensure that the exceptional access policy is strictlyimplemented.

RUSSIAN FEDERATION: ALEKSEI KUDRINGovernor of the Fund

Global Economy and Financial Markets

The forecast for overall global economic growth has remainedalmost unchanged from that set forth in the spring issue of the WorldEconomic Outlook, and is in the range of 3 percent for 2003 and 4 percentfor 2004. At the same time, we note that in the opinion of the Fund’sexperts, the balance between negative and positive risks for realizationof this forecast has changed in favor of the latter. Nonetheless, it is clearthat there is still considerable uncertainty regarding a number of keyassumptions.

Above all, the heavy dependence of global economic growth ongrowth in the U.S. economy is a cause for concern. Persistent significantcurrent account imbalances among the main centers of global growthmean that the threat of sharp fluctuations in the exchange rates of themajor currencies remains. Generally speaking, a state of affairs in whichyear after year the entire rest of the world helps to finance the hugeAmerican current account deficit on the one hand, and on the otherhand, expects to achieve growth by increasing exports to the UnitedStates, can hardly be considered healthy.

Another important factor contributing to uncertainty is thedynamics of oil prices. In the first half of this year, these pricesremained high, in spite of relatively weak business activity. It is clearthat the expected global economic recovery will bring an increase inthe demand for oil, which will put an upward pressure on oil prices.Furthermore, the dynamics of oil prices will depend on changes ingeopolitical factors.

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We read with interest the Global Financial Stability Report, whichalso notes the presence of a number of risks for both the global econ-omy as a whole and for the economies of individual regions and coun-tries. It is noteworthy that almost any sharp change in the dynamics offinancial markets could lead to a heightening of risks. For example,rapid growth in stock market indexes, on the one hand, will contributeto greater investor confidence, and on the other hand, it may be accom-panied by a rise in market interest rates. In turn, a steep rise in interestrates could lead to dangerous consequences for the housing market andconsumer confidence. Furthermore, growth in stock market indexesand growth in interest rates in developed countries may have negativeconsequences for bond spreads of emerging market countries. Andthere will always be the danger that stock market indexes will get out ofline with corporate earnings indicators, which means that another cor-rection in equity prices will be possible. In an environment of globaliza-tion, the macroeconomic policies of developed countries have a majorimpact not only on the economies of their own countries, but also on theeconomies of many other countries, and on the development of theglobal economy as a whole. It is clear that at the present time in devel-oped countries, given low inflationary pressure and still tentative signsof a business recovery, monetary policy should continue to be stimulat-ing. Both the United States and the European Union have the possibil-ity of a further reduction in interest rates should such a need arise.

The discussion of fiscal policy is much more complicated. It is clearthat the opportunities for stimulating business activity with the help offiscal policy have already been exhausted in the major developed coun-tries. Furthermore, in the United States, the major European Unioncountries, and Japan, the task of devising a medium-term program offiscal consolidation is on the agenda. This task is necessitated by both adeterioration of the current fiscal situation and the need to strengthenthe financial position of social security systems in light of the aging ofthe population. At the same time, a premature reduction in fiscal stimu-lation over the short term could undermine the still fragile businessrecovery.

Over the past several years, with the slowdown in global economicgrowth, there has been a strengthening of protectionist tendencies.In this connection, it is difficult to overstate the importance of thesuccessful conclusion of multilateral trade negotiations under the DohaRound. We fully support the joint statement by the heads of the Fund,the Bank, and the OECD, in which the leaders of these organizationsexpressed their readiness to provide effective support to developingcountries during their adaptation to an environment of liberalized for-eign trade.

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We learned with interest that as a group, emerging market countrieshave become net exporters of capital. We realize that this is due to awhole set of circumstances, including payments against external debtand the accumulation of foreign exchange reserves. At the same time,the very fact that emerging market countries are financing currentaccount deficits of developed countries seems to go against the laws ofnature. The reduction in flows of direct foreign investment into emerg-ing market countries is particularly troubling.

Given the low interest rates in developed countries, investors haveshown a great interest in high yield instruments, which led to a substan-tial decline in bond spreads of emerging market countries. Many ofthese countries were able to effect major borrowing under favorableterms in international financial markets with the aim of refinancingtheir external debt and improving its structure. It is clear that suchfavorable conditions for external borrowing are not going to last for-ever. In this connection, all emerging market countries with a high levelof external debt need to develop their domestic markets for borrowing,and also seek to strengthen their public finances.

We read with interest the section in the World Economic Outlookdevoted to an analysis of public debt sustainability in emerging marketcountries. The main conclusion of this analysis is that, although the levelof public debt that can be considered sustainable depends on the com-bined set of circumstances in each individual country, as a rule, thislevel is quite low. It is also noteworthy that the average level of publicdebt in emerging market countries, which currently stands at about 70percent of GDP, exceeds the average level of public debt in developedcountries.

The last issue of the World Economic Outlook includes an interest-ing analysis of accumulation of foreign exchange reserves by Asianemerging market countries. We find interesting the main conclusion ofthis analysis that the accumulation of foreign exchange reserves was jus-tified from the standpoint of overcoming the consequences of the finan-cial crisis roughly up until 2001, while their further accumulation onlyled to an increase in current account imbalances.

Finally, a few words about economic developments in Russia. In theFund’s report, the forecast for economic growth in Russia in 2003 wasrevised from 4 percent to 6 percent. This estimate roughly correspondsto our own forecast, although we do not rule out the possibility that itcould turn out to be conservative. In the first half of this year, GDPgrowth in Russia exceeded 7 percent, while growth in investment wasaround 12 percent. We believe that this sort of investment growth isevidence of a gradual improvement in the investment climate inRussia.

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Strengthening IMF Surveillance and Promoting International Financial Stability

We continue to see Fund surveillance as the most important instru-ment of crisis prevention and welcome the continuing work of the IMFaimed at strengthening it. We support the Fund’s activity on the Finan-cial Sector Assessment Program (FSAP) and on assessing observanceof international standards and codes (ROSCs). Work in this area is pro-gressing well, as demonstrated by the great increase in the number ofROSCs and FSAP reports. Recently, considerable attention has beendrawn to a greater operational separation between program and sur-veillance activities. We agree that in certain cases (for example, coun-tries hit by a major crisis), this sort of separation may be justified.However, in our view combining surveillance and program activitiesshould not be an exception but rather a norm for the operational setupof the surveillance process.

As recent capital account crises have shown, the significant vulnera-bility of emerging market economies arises from the excessive level oftheir public or external debt. Experience shows frequently that the levelof debt that used to be considered “safe” is, in fact, not. In this connec-tion, strengthening of debt sustainability analysis (DSA) is very impor-tant in the context of both surveillance and program work. Anotherimportant instrument for revealing vulnerabilities is the balance sheetapproach, which can help better understand crises in the emergingmarket economies and reveal the hidden vulnerabilities in the finan-cial and public sectors in a timely way, such as currency and maturitymismatches.

A great deal of work has been done by the Fund to develop mecha-nisms to resolve crises, particularly within the framework of the SDRMproposal. In spite of the fact that this proposal ultimately was notadopted, the work on it was not in vain. It contributed to a better under-standing of the problems that exist, and it also generated greater inter-est on the part of private investors in the inclusion of collective actionclauses (CACs) when issuing sovereign bonds.

We welcome the significant progress that has been made recently inpromoting the use of CACs in the issuance of sovereign bonds. It isencouraging that the use of CACs in the New York market, followingthe Mexican placement in March 2003, was not accompanied by anincrease in borrowing costs. This could be evidence of the fact thatCACs are gradually becoming more acceptable to private investors. Webelieve that the Fund should continue its work to encourage broaderuse of CACs by sovereign borrowers. At the same time, the specificconditions recorded in CACs in each individual case should reflect theresults of negotiations between the borrower and the creditors, and it is

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still too early for the Fund to insist on the standardization of CACs or aspecific model for them.

We approve the initiative to develop a code of conduct for sovereignborrowers and private creditors in the restructuring of sovereign debt.At the same time, we believe that the Fund should refrain from sup-porting one set of rules or another in this area and should participate inthe relevant discussions only in the capacity of an observer. At the sametime, if it were to be an agreed code, the Fund could take its provisionsinto account while implementing its policy of lending into arrears.

Supporting Sound Policies with Adequate and AppropriateFinancing: Implementing the Monterrey Consensus at the Country Level

We agree that better external aid is needed to achieve the MDGs incountries with good policies. However, we believe that advocating dou-bling or tripling existing aid volumes creates unrealistic expectationsand detracts attention from the more urgent problem—how to makeexisting aid more effective and supportive of domestic reform effortsthrough improving the structure and modality of aid flows.

Current structure of aid is alarming: of the US$52 billion of ODA in2001 only half was available for expenditures in recipient countries.Increasing this “active” part of aid, improving its delivery and flexibility,better aligning it to budgetary processes in recipient countries, and tar-geting assistance to sectoral programs could substantially alleviate theneed for increased aid volumes.

Modalities of aid often limit its effectiveness. One issue is pre-dictability of flows to countries with good policies. Clarity about thelevels of aid and its conditions is often critical for sustaining reforms inaid-dependent countries. The best way to achieve this is to align aidflows with country-owned development strategies through clear andsimple conditionality derived from these strategies.

Removing artificial restrictions on aid, such as allowing recurrentcost financing, could make aid more effective—if accompanied by tan-gible reform of public expenditure frameworks and measures toenhance growth to replace in-time donor financing with domestic funds.Harmonizing donor requirements of disbursement, monitoring, andreporting is another way of increasing aid effectiveness.

Growth is the key to overcoming poverty and aid dependence. Bothstructure and modalities of aid should be consistent with unleashinglocal growth potential and increasing national competitiveness. Infra-structure is the vital link between aid, growth, and poverty reduction,and we see it as the area where the Bank can make a valuable contribu-tion to achieving the MDGs.

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Enhancing the Voice and Participation of Developing and Transition Countries: Progress Report by the World Bank

We see the stronger voice of client countries not just as a goal initself, but also as an important mechanism of poverty reduction. Clientcountries have much to contribute to this cause. Their knowledge andexperience of development are essential to make development assis-tance work. However, it is not in the interests of any client country toundermine the effectiveness of the World Bank. The Bank’s well func-tioning governance structure is based on “governance by consensus.”We would not support any proposal that undermines this tradition. Norwould we support actions that could handicap the Bank’s financial posi-tion and its capacity to mobilize resources. Thus, instead of opening upthe issue of shares and voting rights, we could do much more to enhancethe real voice of developing and transition countries:

• by involving borrowing countries into IDA replenishment process;• by promoting staff diversity and decentralized decision making at the

World Bank; and• by strengthening the capacity of Executive Directors’ offices repre-

senting a large number of poor countries.

Progress Report on Trade

We appreciate the Bank’s double role as a source of analysis andfinancing. In terms of analysis, the Bank’s advice is valued and recog-nized because it has proved itself able to rise above specific politicalinterests. We are happy to see that the Bank takes a balanced approachin this area and urge it to pay closer attention to emerging protection-ist practices, especially those in the developed countries. Such exam-ples do much damage to trade liberalization in developing andtransition countries, and the Bank’s message of free trade must be con-veyed to the wide audience in the developing and developed countriesalike.

As a financial institution, the Bank has an important part to playin promoting and facilitating trade in its member countries. We urgethe Bank, together with client governments, to identify and addresskey bottlenecks in the area of export finance, administrative tradefacilitation, and adoption of best practices and standards. Forinstance, we urge the Bank to continue its active participation in theIntegrated Framework and to make every effort to implement itsaction plans.

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Implementation Report on Monitoring Policies, Action, and Outcomes Needed to Achieve the MDGs

We appreciate the Bank’s efforts to improve coordination with inter-national agencies and to clarify its own role in global monitoring of theMDGs. We are pleased to note the ongoing work to improve CPIAmethodology and transparency, and especially to involve countries inthe rating process. We believe that CPIA can become an extremelyvaluable instrument of results-oriented global monitoring, reinforcedby its link to IDA allocation. In time it can become the basis of anobjective and consistent system of indicators to improve our under-standing of how policies affect development.

We are gratified that infrastructure has been recognized as a keyindicator of growth and investment climate. The Bank should continuedeveloping more objective indicators that would complement and even-tually replace an earlier generation of perception-based indicators ofgovernance and corruption. It should also attempt to measure results ofBank-supported operations in the governance and anti-corruption area.

We agree that macroeconomic and trade policies in the donor coun-tries and the quantity and quality of aid are highly relevant to develop-ment. Thus, we urge the Bank to go beyond the work by the IMF, WTO,and OECD on these issues and draw on its own operational andresearch experience. Bank reports should examine client countries’policies, but also developments in the trade and aid policies of theindustrial countries, and the extent to which these policies conform tothe Monterrey declarations. Likewise, there should be a candid assess-ment of IFI operations and their role in client countries.

World Bank Group Infrastructure Implementation Action Plan

We support the proposed action plan as an important step in theright direction. We see infrastructure as a key pillar of growth, togetherwith macroeconomic stability, good governance, and a business-friendlyregulatory environment. In this respect, we support innovative ways offinancing infrastructure projects, including sub-national lending, riskmitigation instruments, and “Corporate Projects.” We hope that theseinnovations will be mainstreamed.

When Bank business practices discourage infrastructure projects,borrowers look elsewhere for financing infrastructure needs. This isanother example of why country ownership is important. Country gov-ernments are both Bank shareholders and political representatives ofthe will of their people, and the Bank should rely on them to formulateand express the vision of development unique to each country. NGOs

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and other non-elected entities can also be a valuable additional sourceof information and opinion.

The role of public-private partnership in infrastructure needs moreanalysis. While some such partnerships work, we are concerned thatattempts to attract the private sector into infrastructure projects oftenlead to open-ended public guarantees. Such arrangements combineunbudgeted public commitments with unfounded private contingentliabilities. The resulting confusion of responsibilities may have seriouslong-term political implications, including for the overall public senti-ment toward the private sector.

Given the importance of infrastructure for sustainable development,we believe that this meeting should become the starting point of a full-fledged discussion of infrastructure issues by this committee. The actionplan needs to be supported by further research work, including seriousanalysis of the factors hindering the expansion of World Bank Groupactivities in the area of infrastructure.

SPAIN: RODRIGO DE RATO FIGAREDOGovernor of the Bank and the Fund

The World Economic Outlook: Risks and Economic Policy Responses

After dispelling some of the macroeconomic and geopolitical uncer-tainties of the past months, the latest economic indicators point to a recov-ery of the global economy, albeit with marked geographic imbalances.

The most recent data on the U.S. economy already suggest a signifi-cant upturn. However, it is important to note that the role of the UnitedStates as the engine of growth of the world economy may not be effec-tive if other areas do not join the process, correcting the imbalances thathave been emerging. In any event, the U.S. economy still harbors someelements of risk that merit attention; the size of the fiscal deficit and theindebtedness of the domestic economies are reflected in a currentaccount imbalance and leave growth vulnerable to the dampening effectof the foreseeable rise in interest rates.

On the other hand, interest rate adjustments in response to thedepreciation of the dollar are occurring asymmetrically, with the euroassuming the lion’s share of the adjustment. Meanwhile, some Asianeconomies, which are among the strongest in the world, maintain artifi-cially low exchange rates, thereby preventing adjustment.

As other developed economies are weaker, especially in Europe,international growth will be overly dependent on growth in the U.S.

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The virtual stagnation of the major economies in the area has been dis-appointing. In our opinion, Europe is realizing that the systematicimplementation of growth policies alone is not sufficient to provide thenecessary thrust. Furthermore, we have recently been involved in whatI consider to be a sterile debate on the functioning and implementationof the stability pact. This error has been diverting our attention from thereal challenge facing the European economies: growth. We understandthat it is not possible to realize an acceptable growth potential withoutimplementing far-reaching structural reforms that would remove therigidities in our markets and add flexibility to our supply.

In Europe, the Spanish economy has increased its positive growthdifferential vis-à-vis the euro zone, which will exceed 1.5 percent ofGDP this year. Continued fiscal surpluses and further development ofthe structural reforms of recent years will help consolidate the eco-nomic recovery, capping a decade of sustained growth and creation ofover four million jobs.

In Latin America, improvements in the international economy,reorientation towards responsible macroeconomic policies, and firmsupport from the Fund have enabled economic and financial conditionsto improve in recent months. This week, we held the Fifth Meeting ofIberian-American Ministers of Economy and Finance in Madrid, whichhighlighted the need for further market integration in the countries ofthe region. This must lead to an intensification of integration efforts,both in multilateral processes and in regional agreements. The regionmust also win the confidence of the international markets. To do so, itmust continue the process of fiscal consolidation and public debt reduc-tion. The needed recovery of the demand for investment, whetherdomestic or international, requires a reliably stable legal and institu-tional framework regulating the economic environment.

The signing of the arrangement between the Fund and the Argen-tine Government, supported by Spain, offers this friendly nation a greatopportunity to begin that vital process of structural and institutionalreform, based on its renewed credibility, while honoring its commit-ments, which will enable it to once more attract capital to the country.

The Role of the IMF in the Promotion of International Financial Stability

The International Monetary Fund plays a key role in the promotionand development of financial stability and the application of economicpolicies that lay the groundwork for sound, sustained growth and con-tribute to an improvement in living conditions and to poverty reductionfor all citizens and countries.

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For this task to be accomplished, countries must have an adequatesay and representation in the decision-making bodies of the IMF, basedon their respective importance and responsibilities in the global econ-omy, which secure and strengthen the legitimacy of the institution. TheFund should continue working to make the participation of the variouscountries in the institution more meaningful, in keeping with these prin-ciples. In this context, the quota review takes on special importance asone of the main examples of representation, and in particular the cor-rection of the situation of countries with misaligned quotas.

On the role that the IMF plays in the area of crisis prevention, I wishto highlight a number of factors. For supervision to be effective, stepsmust first be taken to correct the economic and institutional weaknessesidentified in member countries. In the case of the less advancedeconomies, it is necessary to foster the complementary role played bythe Fund in providing technical assistance to help consolidate their eco-nomic and institutional environment.

On the other hand, the availability of sufficient quality data is key tothis preventive policy. The policies of providing and publishing thosedata have strengthened transparency, which has also been encouragedwith the creation of the Independent Evaluation Office, whose firstthree reports have already demonstrated its usefulness in identifyingareas of possible improvement in Fund policies. The strengthening ofthe transparency policy will lead to improvements in the effectivenessof supervision and the external image and credibility of our institution.

In the area of crisis resolution, the conditionality of the Fund’s finan-cial assistance should clearly identify the macroeconomic adjustmentpath and the structural reforms needed to ensure economic stability. Inaddition, we should applaud the practical, voluntary progress made inthe design of resolution mechanisms such as the collective actionclauses that have been used by Mexico and other emerging countries.Spain has undertaken to introduce clauses of this type when issuing for-eign currency instruments.

Another tool that we feel to be of great interest for crisis resolutionin middle- and low-income countries is the so-called Evian approach. Inthis regard, we are in favor of the introduction of flexibility in the pro-cedures for the restructuring of these countries’ external debt, so thatappropriate solutions can be sought. Spain will therefore continue tosupport the current Paris Club efforts to define and profile the maincharacteristics of this system.

A noteworthy development of this past year was the implementationof the action plan to combat money laundering and the financing of ter-rorism. The action taken to combat terrorism in the financial context iskey, and its success depends on broad international collaboration. Spainfirmly supports this process.

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We appreciate the very positive way in which the Fund’s ManagingDirector has offered on this occasion to help developing countriesfacing difficulties as a result of trade liberalization. This is a positivecontribution to the advancement of the Doha objectives, after the fail-ure of Cancun.

The World Bank and Poverty Reduction

Spain reaffirms its commitment to work with the international com-munity to ensure that the developing countries achieve the MillenniumDevelopment Goals (MDGs). We feel certain that success in thisendeavor will depend on the joint effort of developing countries toapply an adequate mix of economic policies, good governance, andinstitutional capacity building. Developed countries should also providegreater access to their markets and adequate financial assistance in sup-port of the relevant policies. Such assistance should go toward achievingthe priorities set by the recipient countries and should be designed insuch a way that they can be effective for each particular case.

With this conviction, Spain undertook, in Monterrey, to increase itsODA from 0.23 percent to 0.33 percent of GDP and stands ready toconsider any mechanism that can serve to mobilize additional resources.The World Bank should play an important role in the search for alter-natives, and we urge it to do so. Although we are convinced of theessential role that ODA can play, it is important to put it into perspec-tive, especially by comparison with the role that should be played by theinternal resources of developing countries.

Spain remains committed to the complementary roles of the twoinstitutions for achieving the objective of reducing extreme poverty insound economies that are capable of attaining and maintaining highlevels of development.

SRI LANKA: K.N. CHOKSYGovernor of the Bank and the Fund

World Economic Outlook and the Role of Bretton WoodsInstitutions

It is encouraging that this year’s Annual Meeting of the Fund andthe Bank is being held in an environment where existing uncertaintiesregarding the outlook for the global economy have now considerablydiminished, and the world economy is showing signs of recovery. Thisray of hope for a recovery of growth has been a result of reduced geopo-litical tensions, accommodative monetary and fiscal policy responses,corrective structural policies by countries, open trade regimes, and the

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recent easing of oil price escalations. Painstaking economic adjustmentsand structural reforms made in some low-income countries, and emerg-ing market economies, including my own country, have strengthenedtheir fiscal foundations, and have improved resilience to setbacks.

We need to ensure that the positive developments are sustained andbuilt upon. Support from the Bretton Woods institutions for economicadjustments and reforms by countries who are making genuine effortsto promote growth and reduce poverty, through market friendly andpro-poor policies, needs to be enhanced.

I appreciate the role being played by the Fund and the Bank in thisregard and in making globalization work better for all. The Fund needsto strengthen its capacity to identify and reduce economic and financialvulnerabilities, covering all systemically important countries for thispurpose.

With our own experience, we feel the PRSP/PRGF/PRSC approachis an appropriate vehicle for helping low-income countries. In thisregard I urge that IDA allocations be increased to countries makinggenuine efforts to strengthen their socio and economic infrastructures,while also assisting them in their efforts to improve aid utilization.

Sri Lanka—Recent Developments and Prospects

I now desire to give an overview of the economic developments andprospects of my own country, Sri Lanka, since we met at our AnnualMeeting in Washington last year. Economic progress is on target. Con-sequently, prospects are promising, and we are working on a RegainingSri Lanka Program, which has received endorsement from both ourmultilateral and bilateral donors.

Last year, in 2002, we substantially met our budgetary goals. Thepreceding year’s negative growth of 1.5 percent was turned into a posi-tive growth of 4.0 percent in 2002. The budget deficit was reduced from10.8 percent in 2001 to 8.9 percent in 2002. Inflation brought down from14.2 percent to a single digit of 9 percent.

For the current year 2003, the Asian Development Bank has fore-cast an average growth of 6 percent for South Asia. Sri Lanka has set itstarget for the year at 5.5 percent. In the first quarter, we have achieved5.5 percent. The projected fiscal deficit is a reduction from the 2002figure of 8.9 percent to 7.5 percent. Our consumer price index hasdecreased. The unprecedented levels of the turnover recorded by theColombo Stock Exchange have earned for itself recognition as one ofthe best performing stock markets in the region. Our currency hasremained stable over the last 18 months. Cumulative exports havegrown by 18 percent in US$ terms in the first half of this year. Foreign

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exchange reserves are now at 51/2 months of imports of goods and serv-ices. The output of major agricultural products, particularly rice,reached a new peak. FDI inflows increased by 300 percent over 2001,the third highest in South Asia during the past 12 months. The State hadreduced its liability to the banking sector, thus making more moneyavailable for productive private sector development. The CentralBank’s policy rates have been reduced. Consequently, commercial lend-ing rates have declined. We have been able to reduce direct corporatetaxation. The resulting position is that the private sector, which the gov-ernment desires to take the lead in the road to growth, has expandedindustrial activity by 7 percent.

The government has concentrated on the recurring question ofimprovement of aid utilization. The utilization in the first eight monthsof 2003 has increased by 76 percent over the same period in the previ-ous year. Our Parliament has enacted the Fiscal Management (Respon-sibility) Law, which fixes the GDP growth requirement and the fiscaldeficit figures to be maintained annually up to the year 2006. The minis-ter of finance is required to report thrice each year to Parliament on thegovernment’s budgetary management. This fiscal discipline supportedby structural reforms enabled the government to implement certainbold but politically unpopular economic measures, which in the eventproved beneficial. The up-shot of our efforts is that Sri Lanka gainedsubstantial international confidence from its multilateral and bilateraldonors at the Sri Lanka Aid Conference held in Tokyo last June. Wealso won for the first time a PRGF facility from the IMF, and a PRSCfrom the World Bank.

Sri Lanka is making a determined effort to establish a permanentpeace within its borders, improve its own resources, and achieve eco-nomic independence, as we have politically. The prevailing peacefulconditions in the country have also helped greatly. However, we foreseethe need for more time to maximize our progress.

In view of the fact that we have received both assistance and guid-ance from the Fund, the Bank, the ADB, and our bi-lateral donors, toachieve what I have just stated, I thought it fit to place before this Meet-ing the consequential progress we have made.

THAILAND: VARATHEP RATANAKORNGovernor of the Bank

I have the honor and pleasure to address the World Bank and IMF2003 Annual Meetings. At the outset, permit me to express Thailand’sappreciation to both the Bank and the Fund management and staff for

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their hard work in the past year with regards to key development issuesand poverty reduction.

In light of an improved outlook for world economic growth espe-cially the United States and Japan, I am pleased to note that developingcountries in Asia continue to be resilient and register a steady economicgrowth. Asia is ready to capitalize on this positive upward year-end out-look. However, we continue to be subjected to many underlying down-side risks, particularly the new nontraditional threats, such as terrorismand new epidemic diseases like SARS. These new nontraditionalthreats have the potential to disrupt economic confidence of a nation, aregion, and indeed the world in an instant.

Coping with such threats beyond the normal development issues willrequire closer international cooperation. As we all have worked hard toeradicate poverty and generate sustainable economic growth, we haveto redouble our efforts to fight these new challenges to maintain finan-cial and economic stability. More broad based, international coopera-tion and timely financial support, particularly from the Bank and theFund, will help eliminate these threats at their core.

These issues should be of immediate and major concern for theBank and the Fund in concert with the traditional development andfinancial stability issues. In addition, we wish to urge the Bank and theFund to continue to support the development of new regional fundinginitiatives such as the Asian bond, which will enable more balancedaccess to international and regional capital flows based on the resourcesand savings of each region. Promoting the capability of developingcountries to save, invest, and utilize their own international reserves tosupport their own regional financial requirements will improve agreater and more balanced free flow of funds and improve financialcooperation and liberalization between the developed and developingeconomies.

Toward this end, we hope that, at the next annual meeting, both theBank and the Fund will be able to demonstrate their support and moreactive and concrete measures to assist in developing regional bond ini-tiatives as well as to strengthen financial architecture required for thefuture.

Thailand welcomes the initiative to reform the governance structureof the Bank and the Fund proposed by the Monterrey Consensus. Webelieve that the Bank and the Fund are proceeding in a more demo-cratic governance structure by increasing the voice and participation ofthe developing members. Much more remains to be done and we areawaiting further positive developments in the Thirteenth Quota Reviewof the Fund, especially the review of the formulas and specific quotaincreases for the developing countries. These actions will be the firstmeaningful step toward a fairer and more balanced governance of the

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Fund. The developing world needs to have a greater say in the affairsand policy of the Bank and the Fund.

We welcome the progress on the effectiveness of the Fund surveil-lance activities especially on the diagnosis of risks and strengthening theassessment and development of standards and codes. We wish, however,to underline that such codes must strike a good balance between thesocioeconomic needs and requirements of member countries, as well asfiscal and financial conditionality. No one single set of policy require-ments is applicable to all countries at any given time. One size does notfit all. Thailand is a real case in point.

In future, the Fund programs must be flexible, well balanced, andconsistent with the pace and position of the member concerned. Welook forward to further progress of these difficult but relevant issues inmoving forward to developing a sovereign debt structuring mechanism,as well as the design of effective voluntary code of conduct across thespectrum of Fund membership.

Permit me to briefly report on Thailand’s recent economic progressand future prospects. The Thai economy has grown faster than forecastin the first half of this year, despite external economic uncertainties andglobal slowdown. The Thai economy expanded by more than 6 percent,the highest growth rate since the crisis of 1997. The strong growthmomentum was achieved by both domestic and external components.

On the domestic front, the fiscal outlook continues to be extremelystrong with high revenue collection and declining deficits. Private con-sumption continues to expand along with increased productivity.Despite the temporary impact of SARS, private investment is expectedto expand due to a continuing accommodative monetary policy with lowinterest rates and a higher capacity utilization rate. Inflation remainslow at 1.8 percent. The unemployment rate has peaked at 1.4 percent ofthe total labor force. Our “Dual Track” development policy has beenthe key to Thai economic success—in the past two years. The DualTrack policy is strengthening domestic growth foundations, as well as astrong external export drive, by maintaining competitiveness and diver-sification of our export markets combined to move the economy. More-over, Thailand has been able to achieve new market opportunities,which have reduced external export volatility. As a result, Thailand hasbeen able to prepay our IMF obligation two years earlier than sched-uled and yet maintain high reserves with fiscal and monetary stability.Permit me to express Thailand’s deep appreciation to the Fund and ourtrue friends for their full support during our time of need. We shallalways remember and treasure your friendship.

On the external front, Thailand expects to record another year of tradesurplus with strong export growth, increasing at around 13.2 percent, aswell as a continuing current account surplus of US$7.95 billion (5.7 percent

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of our GDP). Our foreign reserve stood at US$39.26 billion, reflectingstrong export growth of over 18 percent on a year-on-year basis andconfidence from the international financial community.

Accordingly, international rating agencies have underlined ourachievements by recent upgrading because of clear signs of economicrecovery, strong and sustainable economic growth, fiscal and monetarystability, as well as strong external prospects. Much more remains to bedone, but we are confident that Thailand will continue on this strong,stable, and equitable development path based on a firm foundation ofdomestic growth and a competitive export sector.

In conclusion, on behalf of the Thai delegation, I would like to expressour sincere appreciation to our host, the government and the people ofthe United Arab Emirates for their warm welcome and hospitality duringthis meeting. We reaffirm our support to the Bank and the Fund inmoving toward the achievement of the Millennium Development Goalsby 2015. We strongly support the improvement of the role and voice ofdeveloping member countries, and we shall urge the Bank and the Fundto continue to improve the quality of services in promoting sustainableeconomic and equitable socioeconomic development in the world.

TONGA: SIOSIUA T.T. ‘UTOIKAMANUGovernor of the Bank

It is an honor and a great pleasure for me to address the Board ofGovernors of the International Monetary Fund and World Bank Groupon behalf of the government of the Kingdom of Tonga at the 58thAnnual Meetings. I wish to extend my appreciation to the governmentand the people of the United Arab Emirates for its hospitality andexcellent arrangements.

On the outlook for the world economy, the macroeconomic policiesin industrial countries will continue to support worldwide economicactivity beneficial to all countries, including small island economiessuch as Tonga. The recent depreciation of the U.S. dollar in an orderlyfashion without triggering upward pressure on interest rates and therecent fiscal stimulus augurs well in terms of export competitivenessand growth for the U.S. economy. In addition, we note that a modestrebound is projected for the Japanese economy. It is our hope that theJapanese authorities will continue on a clear and strong commitment tothe policies needed to reverse deflation to enable improved support offuture growth prospects for the world economy.

The focus by the Fund on surveillance will continue to be supportiveof reducing countries’ vulnerabilities to external shocks especiallywithin the context of identifying a criterion for gauging the soundness ofpolicies that could lead to a more objective basis for policy advice.

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Moreover, we welcome the formulation of new ways of providing forthe quick disbursement of concessional finance to assist low incomecountries to deal with exogenous shocks.

For crisis prevention and management, the Bretton Woods institu-tions affect millions of people with the Fund becoming a rule-makinginstitution whose decisions encompass international as well as nationaleconomic policy making. The legitimacy of such a process ought to beenhanced through a democratic framework for governance thatrequires the need for agreement on the fundamental reforms needed tostrengthen developing country voting power, staffing, research, andother constraints faced by developing countries. The diffusion of deci-sion-making power would also improve the perception of the broadacceptance and application of universal models of macroeconomicmanagement and a one size fits all approach. Furthermore, it is consid-ered that there is need for a series of new indicators to provide a com-prehensive perspective as the process of measuring inputs andoutcomes are necessarily complex.

We support the view that, in addressing poverty, donors must assistin strengthening the capacity, technical and financial assistance of smallstate economies like Tonga to implement and achieve the objectives ofpoverty reduction. Such assistance is crucial in addressing issues such asthe way in which basic services are failing the poor, alternative servicedelivery arrangements, and what can be done to improve access of thepoor to basic services.

Although the outcome of the Cancun meeting is a disappointing set-back, multilateral trade liberalization remains essential to achieving theMillennium Development Goals (MDG). We firmly believe that tradeopportunities should benefit all people, and we therefore continue toencourage developed countries to show commitment by focusing on theissues of open markets, fair access and the reduction of distortions totrade subsidies in all areas, which should help millions of people indeveloping countries lift themselves out of poverty.

In Tonga, the economy continued to perform below expectationsduring the past year with higher than expected inflation, slow GDPgrowth, and fragile external and fiscal accounts. The key challenges forTonga in the short term are to preserve external viability through strictfiscal and monetary policies. The key challenge in the medium term is torestructure the public sector in order to support private sector ledgrowth. These challenges are exacerbated by the vulnerability of ourcountry to exogenous factors such as El Nino, energy prices increasesand the effects of the outbreak of SARS.

However, this year will be the second year since the governmentembarked on a comprehensive economic and public sector reform pro-gram in order to respond to the short and medium term challenges

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which the country faces. Progress has been made in the introduction ofnecessary legislation that will provide the foundation and frameworkfor this reform program.

Finally, we would like to acknowledge with appreciation the technicaland financial assistance that both institutions have provided to the gov-ernment and people of Tonga. The assistance continues to improve thestandard of living of our people and we look forward to a continued part-nership for the future. May I conclude by wishing the Bank and the Fundcontinued success in resolving the difficult challenges that lie ahead.

TURKEY: ALI BABACANGovernor of the Fund

Having the honor of addressing the Annual Meetings of the WorldBank and the International Monetary Fund (IMF), I would like tobegin by thanking the government and people of the United Arab Emi-rates for their warm welcome and hospitality during our stay in thisbeautiful city.

I am happy to see global economic and financial conditions startingto improve. The IMF foresees a gradual and moderate upturn in worldoutput beginning in the second half of 2003. Demand and productivityin the United States appear to be strengthening, and Japan’s economyseems to be on the road to recovery. The fundamentals of emerging-market economies are also improving. The agreement between theFund and Argentina on a three-year stand-by program is an importantstep forward, both for the Argentine economy and for internationalfinancial stability. But as we are all aware, risks still abound, and theagendas of both countries and the international financial institutionsare filled with threats and remedies. The international community mustcontinue the discussion of global challenges begun during the DohaRound. The success of these discussions will be crucial for a sustainableeconomic recovery and durable poverty alleviation. I am encouraged bythe proactive nature of the Fund’s new initiative to provide financialassistance for developing countries facing the challenge of adjusting tothe effects of multilateral trade reforms.

We welcome the World Bank’s strong advocacy of trade liberaliza-tion. It is important to be explicit when identifying the direct effects ofthe industrial countries’ protectionist policies, especially those regard-ing agricultural goods and textiles, on the market access of developingcountries and the success of their efforts to reduce poverty. The WorldBank’s increasing focus on trade-capacity building and the correspon-ding increase in the Bank’s trade-related lending are steps in the rightdirection. But unless they are accompanied by real trade liberalization,efforts to build capacity will come to nothing. The Cancun conference’s

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collapse before an accord was reached has dashed the hopes for a short-term convergence of views capable of bridging this policy rift. We urgethe Bank to intensify its advocacy role, to support it with better analyti-cal studies, and to disseminate its findings in a more systematic fashion.

But the improvements in the global economy have not yet beenreflected by increased flows to developing countries. Despite somemodest increases in official development assistance (ODA), morefinancial resources will still be needed to achieve the Millennium Devel-opment Goals (MDGs) by 2015. We are convinced that trade liberaliza-tion could be a much greater source of income for developing countries.Their prospects of achieving the MDGs would be significantlyimproved if they had better access to advanced-country markets.

The Monterrey Consensus called on the developed countries tomake a serious commitment to help poor countries improve their livingstandards. Prompt action and increased aid levels are especially impor-tant. The more slowly help comes to the poor countries, the more com-plex and hard to solve their problems become. I strongly support theUnited Nation’s ODA goal of 0.7 percent of gross national income, asemphasized by Managing Director Köhler in his recent statements.

Despite stronger institutional capacities and better access to mar-kets, the middle-income countries also have their share of problems.High levels of debt and tight fiscal policies sometimes keep them fromincreasing their social spending and improving their progress towardthe MDGs. The middle-income countries would obtain significant ben-efits from trade liberalization, in terms of more and larger markets andincreased employment opportunities.

Let me also mention the importance of infrastructure. Without elec-tricity, clean running water, and properly maintained roads, there cannotbe civilized living conditions, adequate educational standards, or marketsfor the economy’s products. I am therefore very glad that the World Bankhas taken action on this front, by revisiting its infrastructure strategy andlaunching an action plan. I very much hope that the middle-income coun-tries can also benefit from this fresh approach to infrastructure.

As to the need to enhance the voice of developing and transitioncountries, we do not expect a quick fix. But there is no doubt that topursue the vision of the Monterrey Consensus, it will be necessary tocontinue and deepen the dialog between the advanced and the develop-ing countries, and to give the developing countries a stronger voice andincreased participation in the decision-making process.

When it comes to strengthening surveillance and promoting interna-tional financial stability, the Fund’s many initiatives launched over thelast eight years are very encouraging. But now, I think the time hascome to closely monitor their implementation. Vulnerability analysis inthe balance sheets of the major sectors of the economy represents an

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important broadening of Fund surveillance. Information flows andtransparency issues are also important for assessing potential risks. Inthis connection, improvements in the rate of completion of reports onthe observance of standards and codes, countries’ adherence to the spe-cial data dissemination system (SDDS), and countries’ completion offinancial sector assessment programs (FSAPs) are encouraging, thoughthere is always room for improvement.

The international community and international financial institutionsare working to devise new mechanisms for preventing and resolvingcrises. One of the more costly lessons of the last ten years is that the pol-icymakers of developing countries should make more efforts to avoid orprevent the emergence of a crisis.

Prudent policies, good governance, better debt management,improved investment climate, and reduced corruption are importantmeans for developing countries to avoid crises. Steadfast adherence to agood blend of well-designed domestic policies, together with promptinternational assistance, can help greatly. Turkey provides a good exam-ple of crisis recovery through pursuit of correct and just policies.

Most important, I want to repeat that Turkey is determined toimplement the economic program and achieve the long-desired goal ofeconomic stability. It is fair to say that our government has made greatprogress on the economic front. In slightly less than a year, there arealready concrete and visible results of the new government’s economicpolicies. Growth is picking up, inflation is coming down, and interestrates are falling. Turkey has now begun to travel a clear developmentpath leading to reforms on the economic, political, and social fronts.

These reforms are irreversible. Our aim is to have a productive, effi-cient, market-oriented, stable economy. Turkey is now going through adynamic process of legal, political, and economic reforms on the road tomembership in the European Union (EU). Our parliament has approvedseven packages of harmonization laws that will bring Turkey’s institu-tional structure closer to EU standards. The reform movement will bringuniversal standards and practices to all areas of daily life, from produc-tion to consumption, from health to education, from agriculture toindustry, from energy to environment, and from justice to security.

UKRAINE: VALERIY KHOROSHKOVSKIYGovernor of the Bank

Ukraine welcomes the opportunity of having this Annual Meetingsin Dubai and appreciates the efforts of the authorities. It is of utmostimportance to continue having the Annual Meetings in a normal formatin order to secure maximum benefits from official discussions and fromthe exchange of information and assessments of best practices among

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delegations. Dialogue with the private sector is especially valuable. It isimportant to curb any factors which may in future interfere with theusual business of the meetings. One can also imagine an even morethought provoking program of seminars.

At the time of the previous meetings we emphasized the challengesof adjusting to the realities of the global economy. Though someprogress in securing a better globalization has been achieved, new chal-lenges are emerging all the time. Now the international community isfacing the uneven prospects of further multilateral trade liberalization.It is indeed unfortunate given the ever more visible interdependence ofsuccessful development and increased trade with such indispensablepublic goods as peace and security, as well as with poverty alleviation.IFIs may in this new context consider even more research work and out-reach efforts on the likely effects of trade liberalization. Offering someadditional financial safeguards and perhaps guarantees for coveringtemporary balance of payments needs of countries which may needtime to adjust to more open trade, may also help.

Improved prospects for global growth are accompanied by slow-downs in parts of Western Europe and by possible accumulation of newtensions in some segments of the financial markets. Transitioneconomies and most emerging markets have been weathering recentslowdowns remarkably well. The new positive trend which hasemerged: several countries facing the challenges of an ageing popula-tion have started reforming their pension and social security systems, orat least are debating such important reforms. Ukraine has just adoptedthe comprehensive pension reform legislation as well.

Given the less certain prospects for global trade, it is important tokeep track of whether the quality of economic and financial globaliza-tion is improving. High quality globalization should mean that everypart of the international community can be reasonably expected to winfrom better global and regional economic and financial integration. Tothis end it is important to manage the risks of low quality globalization,in order to prevent the concentration of risks in new regions or marketsegments.

We do not think that a reserve accumulation by successful emergingmarkets is the major component of current global imbalances. Theexchange rate policy and trade surpluses of emerging markets are prob-ably less important culprits than the volatility of G-3 currencies andstock markets, the fiscal expansion and accommodative monetarystance in several major economies, and the rapid changes in investor’ssentiments. From the perspective of emerging markets with sustainedtrade surpluses, it is also important to have more balanced growth,which may be less dependent on only few external markets. Multilateraltrade liberalization is one of the venues. Rebalancing of external and

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domestic growth factors should be in any scenario underpinned bystructural reforms in banking and corporate sectors, so that the rebal-ancing is fully owned by the authorities. In this light we would welcomemore attention to and research of all relevant issues, where the so called“fear of floating” will be only one of the dimensions. Internationalfinancial institutions have recently paid more attention to crises preven-tion and to some extent less—to crises resolution, despite the moralhazard and perception of unequal treatment involved in extraordinaryfinancing. It is indeed important to prevent accumulation of unsustain-able debts and to better predict changes in market sentiments. We areglad to acknowledge that many emerging markets and transitioneconomies have reduced their debt burdens due to better growth facili-tated by important structural reforms. Ukraine as well has experiencedsuch positive developments: a stronger external position allows us toconsider gradual early repurchases of our debt to the IMF. Neverthe-less, the need for further cooperation with International Financial Insti-tutions remains.

IFIs should consider more assistance and advice to member coun-tries in upgrading the institutional and regulatory capacity of the finan-cial sectors, fiscal management, achieving greater transparency andaccountability. As it seems to us, concentrating predominantly on pri-vate sector development may inadvertently push to the back, seat thechallenges of making government institutions more efficient. Imple-menting best practices in antimonopoly regulations, transparency anddisclosure requirements, accounting standards, management of finan-cial risks are of special importance to us.

Without quite valuable external expertise, Ukraine would not havebeen able to address in a timely manner the challenges of improvingrevenue collection, reducing quasi-fiscal deficits in the energy sector,implementing modern accounting and banking standards, improvingefforts in fighting money laundering, or subscribing to SDDS. We cher-ish not only technical and other assistance, but also training possibili-ties, conferences and seminars, and civil society outreach efforts. Beingcommitted to building a knowledge based economy in our country, weappreciate the enormous knowledge on best (and worst) practices accu-mulated by the Bank and Fund and would call on both institutions toimprove their own knowledge management and knowledge dissemina-tion efforts. Discussions on economic strategy and surveillance exer-cises may be more consistently used for discussing the experience ofother countries in addressing similar challenges.

The improved treatment and reputation, better tailoring of precau-tionary arrangements of the Fund may in many ways help countries thatdo not have balance of payments financing needs. Such arrangementsshould concentrate on longer-term structural challenges, while currently

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they reflect more of the short-term anti-crisis logic of stand-by arrange-ments. Longer and structural precautionary arrangements will allow forbetter coordination with longer term national goals and with the WorldBank strategic vision.

The discussion at the Development Committee emphasized that it isrealistic to expect some additional progress in addressing poverty, fight-ing HIV/AIDS, and improvements in infrastructure. The road to suc-cess will indeed depend not only on strong domestically-owned policies,but also on timely and adequate financing. This financing for sustain-able economic growth is not to be exclusively official, though the WorldBank has an indispensable role. Improvements in the investment cli-mate, better conditions for entrepreneurial activities, improved corpo-rate governance and deeper financial markets should promote a surgein investment, both domestic and foreign.

Ukraine continues to demonstrate good economic performance: theeconomy is expected to grow by 21 percent in the course of 2001–03, whileinflation is subdued at 12–13 percent in three years. Since 2001 exports andimports increased by 38 and 41 percent respectively, while the level of for-eign debt declined in relative and absolute terms. We managed to diversifyour trade significantly, while the demand for our major exports hasrecently been good. Investment activity is picking up, household incomesare growing steadily, and we are aiming at a better balanced growth. Tofurther support both domestic demand and supply response, we are imple-menting tax reform aimed at reducing rates and broadening the base; wehave started the pension reform, are maintaining a healthy fiscal stance,and are conducting prudent monetary and banking policies. Privatizationof especially large enterprises has accelerated recently as did our energysector reform. We are considering ways and means of increasing the fac-tors of growth stemming from innovations and knowledge.

We see some room for improvement in the streamlining of VAT leg-islation and improving its administration, in increasing the trans-parency, and in improving our communications with civil society.Completing the WTO accession negotiations remains among our prior-ities and we are currently trying to harmonize our legislation and regu-lations with WTO requirements and with EU best practices. We are alsoparticipating in efforts to remove trade barriers in the regional context.

UNITED ARAB EMIRATES: MOHAMED KHALFAN BIN KHIRBASH

Alternate Governor of the Bank(on behalf of the Arab Governors)

I am honored to have the privilege of delivering the joint ArabGovernors’ speech for this year’s Annual Meetings of the Boards of

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Governors of the World Bank and the International Monetary Fund. Atthe outset, let me extend a warm welcome to the distinguished Gover-nors, management, and staff of both institutions, members of delega-tions, guests, and visitors to the first Annual Meetings to be held in ourregion. I would also like to extend my congratulations to you, Mr.Chairman, on your selection as Chairman of the Annual Meetings andto welcome you in that capacity. On behalf of the Arab group, I wouldlike to thank the United Arab Emirates for its tremendous effort inorganizing this event, which will hopefully provide participants with theopportunity to become more familiar with the issues and challengesfacing the region.

While occasionally showing temporary short-lived pickups ingrowth, the past three years have, for the most part, witnessed a weakglobal economy, which was reflected in a significant slowdown in eco-nomic activity in the major economic regions, as well as many emergingmarkets and developing countries. Because of its dominance and size,the slowdown in the U.S. economy was a major factor in the overallglobal weakness. More recently, we are heartened to note that forward-looking economic indicators appear to be signaling a recovery, at leastin the world’s largest economy. While the temporary revivals in the pasttwo or three years were short-lived and quickly aborted, it does appearthat the ongoing recovery in the United States is taking hold, followinga period of unprecedented expansionary fiscal policies and near-recordlow interest rates. In spite of this, significant risks to the spread and sus-tainability of growth still abound.

In order to strengthen and, hopefully, sustain this welcome recovery,there is a need to address emerging, as well as long-standing, problemsin a number of advanced economies. While short-run expansionaryfiscal policies to sustain growth are understandable in a number ofmajor countries, a need for fiscal consolidation in the medium term isclearly evident, particularly where such deficits threaten to jeopardizemacro stability. We also should not lose sight of the impending pres-sures on pension systems virtually in all regions of the world, which is animportant consideration in formulating fiscal policies over the mediumterm. In addition, bold structural reforms need to be pursued moreactively in a number of major countries in order to effectively absorbthe benefits of this incipient recovery, and hence reduce global imbal-ances that continue to plague major economic regions.

As the world has repeatedly witnessed, with increased globalization,the externalities arising from developments in the major countries aretransmitted more rapidly to the global economy and, in particular, toemerging and developing economies. The increasing interconnected-ness of the world economy highlights the need to strengthen the effec-tiveness of Fund surveillance. In addition to its surveillance of emerging

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and developing countries, we call on the Fund to enhance the qualityand effectiveness of its surveillance of major industrial countries. Inparticular, emphasis should be placed on addressing the present largemacroeconomic imbalances in these countries, on achieving greater sta-bility in the exchange rates of major currencies, and on acceleratingstructural reforms. Fund surveillance should also place more emphasison addressing trade-distorting policies, including, in particular, tariffand non tariff barriers as well as subsidies to certain economic activitiesin industrial countries, which exceed US$300 billion annually in agricul-ture alone. These barriers not only negatively impact domestic growthand the well-being of the population of industrial countries, but also arehighly detrimental to the economies of developing countries and are aserious impediment to the fight against poverty.

As we emphasized in our speech last year, increased globalizationalso calls for improved governance in the Bretton Woods institutions. Inthis regard, while we welcome the progress achieved in enhancing thevoice and representation of developing countries in these institutions,we call for more efforts to ensure that the interests of the majority ofthe membership are better reflected in the decision-making process,with a view to strengthening global ownership and the legitimacy ofboth institutions and their policies. Progress on this front has been lessthan satisfactory. The Bank and the Fund also should continue to workwithin the cooperative and voluntary framework that has served themembership well. This will also enhance the candor of staff discussionswith authorities in the context of surveillance. In addition, it is well toemphasize the pivotal role played by the provision of technical assis-tance to developing countries from the Bank and the Fund, and theurgent need to enhance the resources dedicated to this activity. Techni-cal assistance is key to strengthening the institutions that form the basisfor sustainable long-term growth. In addition, we underscore the impor-tance of enhancing the participation of borrowing countries in the for-mulation of the policies of the International Development Agency.

Let me now address some of the other issues related to the WorldBank Group, which continued to focus on its primary objective ofpoverty reduction especially in the context of the Monterey Consensus.In this regard, we commend the efforts to improve the quality offinanced projects. We also support the priority accorded by the Bank tothe education, health, and water sectors, as well as combatingHIV/AIDS. In addition, we particularly welcome the increased focus oninfrastructure projects and the measures taken to simplify lending pro-cedures and reduce the cost of borrowing.

While we support the increased attention to private sector develop-ment and enhancing the business environment in developing countries,we call for more efforts to be devoted to our region by the International

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Finance Corporation, particularly in the field of the financial sector,small- and medium-sized enterprises, and technical assistance todevelop the private sector. Here, we note that employment creation isof high priority to absorb the increasing labor force in the Arab regionand elsewhere. Small, well-conceived projects are better suited toaddress this important concern.

We would also like to note the large scope for expanding the activi-ties of the World Bank Group into regional projects that have promis-ing economic returns and that can capitalize on existing integrationopportunities. In this regard, we call for more attention to regional proj-ects in the water and irrigation sectors, as well as in connecting and inte-grating electricity grids.

We welcome the progress made so far in implementing the enhancedHIPC Initiative, which has succeeded in reducing the debt burden ofmany low-income countries. However, the process of bringing eligiblecountries into the initiative should be accelerated. In addition, anumber of countries that have already received relief are facing difficul-ties in achieving a sustainable debt position. More realistic growth andexport projections on which the amount of debt relief is based, as wellas a careful consideration of issues such as growth promotion throughtrade and the adequacy of grants and concessional resources, areneeded. We call on industrial countries to increase their provision offinancial assistance which, in most cases, falls short of the UN target of0.7 percent of GNP. Here, we would like to point out that the assistanceprovided by many Arab countries and institutions, including under theHIPC Initiative, has exceeded the UN target.

In view of the conflicts that continue to hinder economic develop-ment and poverty reduction in many countries, and to affect regionaland global stability, we value the increased attention of the Bank andthe Fund to post-conflict issues. We would urge that this effort bestrengthened in cooperation with the UN and other relevant bodies. Wealso welcome the continued Fund involvement in the Sudan and theinterest of the World Bank to resume its operations in that country. Inthis connection, we urge that the country be allowed to benefit from theHIPC Initiative as soon as possible, and note that it has met all therequired conditions. With regard to the recent lifting of sanctions onLibya, we welcome this positive step that will help accelerate economicdevelopments in that country.

The Arab countries are committed to continue playing their part inhelping reach the Millennium Development Goals, most notablythrough the provision of high levels of official development assistance.We also continue to accord high importance to the maintenance of sta-bility of oil prices at reasonable levels, with a view to serving the collec-tive interest of both producers and consumers. We reaffirm our

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commitment to multilateral trade liberalization in the context of theWorld Trade Organization, and stress the importance of the provisionof adequate technical and financial assistance by international institu-tions to enhance the capacity of developing countries to conduct com-plex trade negotiations, and to overcome the short-term restructuringcosts associated with trade liberalization. These areas are too often notaccorded sufficient priority, even though they are essential in reapingthe well-known benefits of trade.

Regarding recent developments in our region, in addition to theadverse impact of the global slowdown, severe geopolitical shocks, andthe continued tensions in Palestine and the crisis in Iraq, culminating inthe war in that country, have adversely affected the region. This wasreflected in a drop in tourism and investment flows, and in some cases,damage to physical capital, institutions, and infrastructure.

In spite of these adverse global and regional developments, theArab economies have shown a high degree of resilience, and their per-formance in the past year was significantly better than expected bymany observers. What was judged to be impending economic crises insome countries were averted, and growth in the region is envisaged toincrease in 2003 to 4.5 percent, a level similar to the projected averagefor developing countries. While buoyant oil prices contributed to thisoutcome in oil exporting countries, other factors behind the resilienceand relatively good performance of the region lie in the economicreforms implemented over past years, the generally prudent policystance, and the policy adjustments made to minimize the effects ofadverse developments.

Despite a moderate fiscal easing in some countries to mitigate theeconomic slowdown, fiscal balances improved in the region as a wholeas oil-exporting countries benefited from buoyant oil prices andrefrained from spending the temporary increase in revenue. Addition-ally, and more significantly, the region continued to implement struc-tural fiscal reforms including widening the tax base, enhancing customsand tax administration, and strengthening expenditure controls. Fur-ther progress has also been made in rationalizing subsidies and improv-ing their targeting, as well as in increasing fees on services and utilities.Consequently, the countries of the region are expected to achieve abudget surplus of 0.8 percent of GDP on average in 2003.

Monetary and exchange rate policies continued to be geared tomaintaining low inflation, projected at 3 percent in 2003, and enhancingthe region’s competitiveness. Ongoing Fund technical assistance is sup-porting the development of new indirect monetary policy tools, andefforts to enhance the policy frameworks. This permitted the introduc-tion of more flexible exchange rate policies in some countries in theregion, which should help enhance their resilience to external shocks.

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The prudent conduct of monetary and exchange rate policies wasreflected in the general absence of significant balance of payments pres-sures in the region despite the unfavorable global and regional condi-tions. Foreign exchange reserves stabilized and, in some cases,increased. Progress was also made in enhancing the soundness of finan-cial sectors through strengthening prudential regulations and banksupervision, as well as the restructuring of banks. These reforms were inmany cases guided by FSAP exercises, which have been completed for anumber of countries in the region. Our countries are determined to con-tinue to strengthen their financial systems, wherever there is a need, inorder to reduce their vulnerabilities and the potential for their abuse,and to enhance their contribution to saving mobilization and private-sector development.

Progress continued to be made in implementing structural reformswith a view to encouraging the private sector and foreign direct invest-ment, including through deregulation and privatization. Trade liberal-ization proceeded both within the region and with other economies,including in the context of free trade and association agreements.

Let me stress that, notwithstanding the ongoing reforms, there is aclear realization in the region that policies to enhance growth will needto be accelerated in order to absorb the rising labor forces in the region,to further diversify the region’s economies, and to improve social indi-cators. The increasing attention to the upgrading of human capital, aswell as sustained economic reforms, should continue to enhance pro-ductivity and growth. Continued support from the international com-munity and the Bretton Woods institutions, both through technicalassistance and, where needed, financial assistance, would be essential tohelp the countries of the region implement their reform agendas andwithstand the economic hardship arising from the global slowdown andtensions in the region.

The difficult conditions to which the Iraqi people have been sub-jected highlights the need to spare no effort to alleviate their sufferingand to help the reconstruction of the country, which in turn will con-tribute to achieving stability and prosperity in the region. We call on theinternational community to contribute to the rebuilding of Iraq by pro-viding assistance to rehabilitate social and economic institutions,rebuild the infrastructure, and help the country resolve its economicproblems. We look forward to the donors’ conference, scheduled totake place next month, and hope that it will provide the opportunity toopen a new chapter towards establishing a strong basis for the stabilityand development of the country, and the region in general. We under-score the right and responsibility of the Iraqi people to manage theirresources, and to rebuild their institutions in accordance with their

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freely exercised democratic choice in a manner that will enable thecountry to achieve economic stability and development.

With regard to the situation in Palestine, we commend the economicand financial reforms implemented by the Palestinian Authority in anextremely difficult environment. However, achieving the economic andsocial development of the Palestinian people hinges on ending theIsraeli occupation and hostilities, as well as attaining a lasting, compre-hensive, and just peace, based on UN Resolutions 242, 338, and 194.Achieving peace would help redirect large resources to economic devel-opment and improve living standards in Palestine and many countries inthe region. We therefore call on the international community to exertevery effort to bring the peace process to a successful conclusion and toprovide more resources to help the Palestinian people in these difficulteconomic conditions. We would also like to express our appreciation ofthe assistance provided by the IMF and the World Bank to the Palestin-ian people, and in particular thank the staff of the two institutions whocontinued to work in the Palestinian territories under extremely diffi-cult conditions.

Finally, I would like once again to welcome you all in our region andhope that this year will witness the hoped-for economic recovery andprogress towards global stability and prosperity.

UNITED KINGDOM: GORDON BROWNGovernor of the Fund

Introduction

We meet here in Dubai at a time when there are clear signs that eco-nomic activity is strengthening in some major economies, and, morebroadly, indicators point to the prospect of a steady and strengtheningrecovery going forward. When we met last April, it was a time of partic-ular political and economic uncertainty and tension. Since then, themajor uncertainties have clearly lessened. Nevertheless risks remain—in industrial, emerging market, and developing countries—and it isimportant that policymakers stand ready to take the necessary policyactions. This underscores the importance of continued internationalcooperation and multilateral progress.

While prospects have improved in some major economies, all coun-tries have an interest in seeing more balanced growth going forward.So we must address the lack of sustainable, robust productivity growthin every continent of the developed world. Structural reform is vital inthis respect. And we must secure a speedy resumption of the DohaRound.

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Economic Stability

For rich and poor countries alike, stability is the precondition forglobal prosperity and growth, and all major countries—Japan, America,and Europe—will be asked this weekend what contribution their conti-nent can make, not just to restore growth now, but to create the condi-tions for sustained long-term prosperity. With proactive monetary andfiscal policies, growth in some major economies is now strengthening.The United Kingdom is on track for stronger growth with low inflation.But because we must sustain growth, it is important that we focus alsoon structural reform. The G-7 have agreed an Agenda for Growth, andit is now vital that we implement reforms to overcome the barriers tohigher productivity, employment, and growth.

In the United States, actions to strengthen corporate governanceand demonstrate that fiscal policy is sustainable over the medium termare important. Japan must step up its financial sector reform. And,accompanied by stability oriented fiscal and monetary policy, Europemust push ahead with the necessary structural reforms that have heldback the continent for too long. European ministers should togetherembrace flexibility for labor markets, liberalization in capital and productmarkets, and tax competition in place of tax harmonization—in truth, anew growth agenda for Europe. Most of all, we should recognize that itis only by encouraging enterprise—and rewarding it properly—that wewill create the growth, productivity, and employment we need. Thisenterprise agenda will be at the heart of driving forward Britain’sreforms in our pre budget report.

So Europe must embrace labor-market flexibility combined withpolicies that equip people with the skills they need for work. Europemust embrace liberalization in product and capital markets. The open-ing up of electricity utilities, telecommunications, and financial servicesmarkets must proceed with speed. And building on U.S. experience, wemust do more, including through tax incentives, to promote a venture-capital industry.

In the United Kingdom, we are determined to play our part, both inmaintaining the conditions for stability and growth and through struc-tural reforms. In 1997, our commitment to put stability first led us toadopt a new fiscal and monetary regime, based on clear policy rules,well-established procedures, and an openness and transparency not seenin the past. This new framework makes us better placed than before tocope with the economic cycle, giving us low inflation, low interest rates,and low unemployment. And it is this commitment to long-term stability,growth, and employment that is the foundation of our decisions today.

In addition, in the budget in April 2003, I announced further steps todrive forward productivity growth across the United Kingdom, including:

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a package of reforms to support new and growth businesses; further stepsto support a modern and competitive tax system; reviews of innovationpolicy in the United Kingdom, and the interaction between businessesand U.K. universities; and additional measures to improve skills. Ourpre budget report will announce major detailed reforms on the labormarket and on work incentives.

With financial market conditions looking more favorable, now is thetime also to focus on structural reform and improved debt managementin emerging markets. More broadly, it is important that we use thisperiod to identify problems early, address vulnerabilities, and providecandid advice on policy reforms going forward. Effective internationalsurveillance and multilateral cooperation are essential tools for achiev-ing this, strengthening crisis prevention, and so promoting stability andsustainable global growth.

This meeting in Dubai offers a window of opportunity. It is essentialthat we address the long-term challenges facing the international finan-cial community:

• promoting the conditions for stability and growth, and strengtheningthe mechanisms for crisis prevention and crisis resolution;

• calling for urgent resumption of the trade talks as soon as possible tosecure concrete progress with multilateral trade liberalization anddeliver on the commitments made at Doha;

• creating the right domestic conditions for investment and stability;• confronting the global war against poverty and addressing the urgent

challenge of achieving the Millennium Development Goals, includingthe need to double aid through the International Finance Facility.

Crisis Prevention and Resolution

I believe that, just as we set down a new rules-based system in theUnited Kingdom for a new monetary and fiscal regime, we should, inpursuit of the objectives of stability, development, and prosperity, estab-lish a new rules-based system of governance for the international finan-cial community. This new system should be founded on clearprocedures, with all countries, rich and poor, pursuing agreed codes andstandards for monetary and fiscal transparency, and for corporate gov-ernance. That is why we have put in place the system of internationallyagreed codes and standards. Almost half of the Fund membership hasnow completed a ROSC and over 70 percent of those have been pub-lished. We strongly welcome this. But we must continue to do more toenable all countries to participate, providing the necessary technicalassistance. On transparency, we strongly support the steps agreed by theBoard to enhance further the publication of Article IV reports and pro-gram documents.

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Effective and persuasive surveillance is essential for all membercountries. We welcome the Fund’s considerable progress on reforms tostrengthen surveillance. Yet significant challenges remain, and we willneed to monitor carefully their implementation and impact. Morebroadly, I believe there is a strong case for further institutional reformsto ensure that the IMF is as credible and independent from politicalinfluence in its surveillance of economies as an independent centralbank is in the operation of monetary policy. We must implementreforms to ensure:

• greater independence—ensuring that the Fund applies objective, rig-orous and consistent standards of surveillance to all member coun-tries; and that surveillance is, and is seen to be, independent ofdecisions about program lending and the use of IMF resources; and

• greater accountability—with the IMFC or the Board having a formalresponsibility to set an annual surveillance remit, with the IMF man-agement and staff reporting back each year on their performance andeffectiveness against the remit.

It is important to ensure that surveillance impacts effectively ondecisions made by program and non program countries alike. In thisrespect, we continue to believe in the importance of the objectivesunderlying the Contingent Credit Line—to provide incentives for coun-tries to put in place strong policies and to support those members withstrong policy frameworks from the impact of external shocks. It isimportant to find an effective way to achieve these objectives in thecontext of the Fund’s review of the CCL.

On crisis resolution, we very much welcome the widespread intro-duction of Collective Action Clauses, and encourage their further use.We support the ongoing work by issuing countries and their creditorstowards developing a code of good conduct. We encourage the Fund tocontinue to strengthen its analysis of debt sustainability and balancesheet vulnerabilities. And we welcome the ongoing work by the IMF onissues relating to debt restructuring raised during the work on the Sov-ereign Debt Restructuring Mechanism, including aggregation and intercreditor equity. Under this new framework we can move from lettingcrises happen and then intervening, to a new paradigm: systems that inthemselves diminish the likelihood of crises; earlier awareness as diffi-culties arise; and more measured and orderly responses when criseshave to be resolved.

Trade

The international community must make urgent progress on tradeand development. We must reaffirm this weekend our full political

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commitment to a multilateral approach to trade liberalization, and tomaking substantial and concrete progress. A speedy resumption of theDoha Round is vital for global growth and our development objectives.It should focus on the core issues of importance to developing countriesfor open and fair markets, especially in agriculture. This will be criticalfor demonstrating the international community’s continued commit-ment to multilateral cooperation, supporting higher growth and finan-cial stability, and enabling developing countries to participate on fairterms in the world economy and make progress towards the MillenniumDevelopment Goals.

There is clear evidence supporting the link between developingcountries’ own trade policies and their economic growth. In the lastforty years those developing countries that have managed to be moreopen and trade more in the world economy have seen faster growthrates than those that remained closed. But any liberalization has to beappropriately sequenced and integrated into countries’ poverty reduc-tion strategies. We welcome the IMF’s initiative to provide assistance tocountries to help them address the transitional impact of trade reforms.

And, as developing countries have continued to argue so strongly, anagreement on agriculture is central to any progress on trade. Threequarters of the world’s poor live in rural areas and an end to agricultureprotectionism in the developed world could be worth as much asUS$100 billion a year to developing countries. And if we were to halveprotectionism more widely in agriculture and in industrial goods andservices we would increase the world’s yearly income by nearly US$400billion dollars: a boost to growth of 1.4 percent. Developing countrieswould gain the most in terms of GDP growth—an estimated US$150billion a year—but all countries and regions stand to benefit.

Creating the Conditions for Productive Investment

To ensure growth and development we must take steps to promotedomestic and foreign investment—and find better ways for public andprivate sectors to work together in raising the level and quality ofinvestment. Because investment will flow to those countries that are themost stable, and ever more rapidly away from those that where theenvironment for business is volatile and uncertain, there is an evengreater premium than before on governments running a successfulmonetary and fiscal regime to achieve high and stable levels of growthand employment over the long term. This is true for all countries, indus-trialized and developing.

In seeking more favorable environments in which private sectorinvestment can be more productive in developing countries, country-owned poverty reduction strategies have correctly focused on creating

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the right domestic conditions for investment, including good gover-nance and sound legal processes that deter corruption; improved infra-structure; and an educated and healthy workforce. We support thecreation of investment forums bringing public and private sectorstogether to examine the barriers to investment and how to securehigher levels. Most importantly, investment forums are helping to breakdown the assumption that private sector development should be ledsolely by business or directed by the state—instead recognizing thatpublic and private sectors must work together in partnership to secureeconomic growth and poverty reduction.

Achieving the Millennium Development Goals

Stability, trade and investment are all vital but there cannot be asolution to the problems that developing countries face without a fourthreform: a substantial transfer of additional resources from the richest tothe poorest countries, in the form of investment for development, thatbuilds new capacity to compete and addresses the long term causes ofpoverty. In 2000 for the first time the world community signed up to thehistoric shared task of meeting the Millennium Development Goals by2015—including to eradicate extreme poverty, achieve universal pri-mary education and radically reduce child poverty.

Then at Monterrey in 2002 the international community agreed anew compact for development that, in return for developing countriespursuing corruption free policies for stability and growth and creatingfavorable environments for trade and investment; developed countriesshould be prepared to increase vitally needed funds to achieve the Mil-lennium Development Goals. And the additional $16 billion dollars ayear of extra funding agreed represented the first increase in officialdevelopment assistance for twenty years. For its part, the United King-dom will increase its aid budget to nearly 4.9 billion by 2006—a neardoubling in real terms.

Our aid is increasingly provided in support of poverty reductionstrategies, which are leading to improvements in the policies of devel-oping countries and in the focus of donor support. We welcome theFund’s ongoing efforts to align the PRGF behind the PRSP and in sup-port of the MDGs, early work on a long-term role for the Fund in low-income countries, and we look forward to their continuing work onensuring that there is adequate financing for PRGF arrangements.

At the same time we must also do more to make better use of exist-ing resources, including the European Union aid budget. Reorderingpriorities, untying aid and pooling funds internationally could allrelease additional funds for the poorest countries. We must work toachieve the rapid and full implementation of the HIPC Initiative to

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provide a robust exit from unsustainable debt. Of the 38 countries thatstand to benefit from HIPC debt relief, there are now 27—23 fromAfrica and 4 from Latin America—which already benefit from debtrelief that will rise to over US$70 billion in total. For these 27 coun-tries the United Kingdom is providing 100 percent bilateral debtrelief, and this offer is open to all HIPC countries as they become eli-gible for relief under the Enhanced HIPC initiative. And now we mustmove into the next stage—a plan for post conflict and conflict coun-tries so that the full $100 billion committed in Cologne in 1999 can bewritten off.

We urge the IMF and the World Bank to continue to intensify theirefforts to secure full participation of all creditors in the initiative, and toreaffirm the objective of ensuring debt sustainability for countriesreaching completion point. We must also work together to review themethodology for calculating the amount of “topping up” debt reliefavailable—which could provide an additional US$1 billion of extra debtrelief, with pledges to the HIPC Trust Fund to meet the extra costs ofAFDB and other non-World Bank multilaterals. For our part theUnited Kingdom pledges to contribute our share of these costs.

But debt relief and the aid already pledged will not be enough ontheir own if we are to meet the Millennium Development Goals. In par-ticular urgent action is needed on health and education. Every yearmore than 10 million children die of preventable diseases (30,000 aday), and more than 500,000 women die in pregnancy and childbirth.The tragedy of HIV/AIDS is not only a human one, its impact on socialand economic development in sub-Saharan Africa in particular isalready reversing progress that has been made in the past. So, in Dubaiwe must follow up the recent agreement on access to life saving medi-cines, with the proper financing of health care delivery systems. TheUnited Kingdom is committed to predictable, multi-year funding forthe Global Fund to fight AIDS, Tuberculosis and Malaria.

And we know that education for all is central in order to promote avirtuous circle of debt reduction, poverty alleviation and economicdevelopment. The U.K. Government is committed to making the WorldBank Fast Track Initiative work. But an estimated US$10 billion moreeach year is needed if we are to reach our goal of primary education forall. And health, including the battle against HIV/AIDS requires at leastUS$15 billion extra and probably US$30 billion.

We welcome the recent Bank paper on Supporting Sound Policieswith Adequate and Appropriate Financing. The Bank estimates that anear doubling of the additional commitments made at Monterrey couldbe used immediately, and effectively to make progress on the MDGs,some US$30 billion annually. But they have also made clear that eventhis is an under-estimate of the resources required, with substantially

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more likely to be needed in the short-medium term, with a current esti-mate of at least US$50 billion annually.

Our vision is clear. No country genuinely committed to economicdevelopment, poverty reduction and to the genuine good governancestandards should be denied the chance to make progress because of lackof investment. The scale of resources required to meet this challengecannot be met by either poor countries or by traditional aid. We neednew means to deliver higher levels of support to finance health, but alsoeducation and anti poverty programs.

Hence, the proposal for an International Finance Facility. On thebasis of long-term, binding donor commitments from the richest coun-tries, some of which have already been made, the facility would lever-age in additional money from the international capital markets to raisethe amount of development aid for the years to 2015 from US$50 billiona year to US$100 billion per year.

The facility would provide a temporary framework seeking to raiseadditional funds for development in the years leading up to 2015. In pro-viding an immediate, critical mass of predictable, untied and effective aid,predominantly in grant form, the facility would allow the poorest coun-tries to invest in their priorities, and would provide the catalyst forgrowth-driving private investment. Further, this virtuous circle of invest-ment for future success, as opposed to compensation for past failures, isfundamental to delivering sustainable debt relief; and to enable develop-ing countries to build the economic capacity necessary to benefit from thetrade reform critical to future world economic development and stability.

Just as the richest countries must fulfill their moral and politicalresponsibility, developing countries must demonstrate a commitment topoverty reduction strategies, addressing political and economic stabilityand creating an enabling environment for human, physical and socialinvestment. Anticorruption and pro stability policies must go hand inhand with country-owned poverty reduction strategies.

Building on the valuable discussions we have had so far in the inter-national community, we call on the IMF and the World Bank to carry outfurther work on the case for more aid, aid effectiveness and absorptionissues, as well as on the details of the facility. It is also important to widenand deepen our discussions, and we will want to consult closely withdeveloping and emerging market countries over the coming months. TheIMFC should return to this issue in the light of this further work.

Conclusion

So here in Dubai, we call for the whole international community toconfront the global war against poverty. This is a window of opportunitywhen the richest countries must redeem their promises to the poorest

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countries and work together to build a virtuous circle of debt relief,poverty reduction, trade, and economic development.

UNITED STATES: JOHN W. SNOWGovernor of the Bank and the Fund

To Sheikh Maktoum bin Rashid al Maktoum, emir of Dubai, and thepeople of the Emirate of Dubai, I want to express my heartfelt appreci-ation for your wonderful hospitality.

All our nations, today, have achieved a level of interdependence.Economic performance and financial flows in each of our economiesaffects all of our economies. This connection reinforces our mutualimperative for economic growth.

In the United States, President Bush has taken significant steps toaccelerate economic growth. The president’s Jobs and Growth Plan, inparticular, has made a real difference. A recent Wall Street Journalsurvey of economists now predicts growth of 4.7 percent in the secondhalf of this year. This month, President Bush unveiled a six-point planfor the economy to further strengthen the recovery.

Other countries have also moved to stimulate growth. We need towork together to build on this progress. And we believe strongly thatprogress is best achieved in a system incorporating the principles of freetrade, free capital flows, and market-based exchange rates among themajor economies.

Together, developing and industrialized countries alike should takeadvantage of the opportunities offered by free trade. The United Statescommends the willingness of the International Monetary Fund (IMF)and the World Bank to support developing countries with adjustmentneeds related to trade liberalization. This was an important message toWorld Trade Organization members at Cancun, despite the impasse.

The fact is, emerging markets are enjoying improved circumstancestoday. Borrowing costs have fallen; crises are less numerous and lesssevere; and more capital is flowing to these economies.

Not coincidentally, we have been making great progress in strength-ening the international financial system. Collective-action clauses insovereign debt are now the market standard. The official communityhas set clear limits on its resources, limiting contagion. Crisis preventionhas improved as well.

We can and should go further. We need an IMF that is at the cuttingedge in its analysis, resolute in its advice, and forceful in its support forstrong economic policies.

The IMF should ensure that its analysis of member economies isthorough and rigorous. This means addressing the issue of currencymismatches. The IMF also needs to focus its lending where it can

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achieve results—results that will reduce reliance on IMF resources.Moreover, greater transparency in IMF procedures and public disclo-sure of IMF documents will help the markets and the public at large tounderstand and support reforms.

Official assistance to developing countries should have the objectiveof raising productivity growth. Fast-growing economies create jobs andopportunities for their entire populations, far more than any externalaid program can create.

President Bush’s Millennium Challenge Account ties assistancedirectly to the performance of recipient countries to make a real differ-ence for their populations. The World Bank, too, is increasing its use ofgrants, focusing on results, and helping countries foster a vibrant privatesector. I want to specifically recognize the International Finance Corpo-ration and International Development Association initiatives to expandsmall-business access to credit in Africa. I commend the Bank for agood start. Nonetheless, there is more to be done.

I call on the Bank to integrate the principles of rewarding perform-ance and delivering results throughout its operations. We should fullydisclose the performance rating system used to allocate resources to thepoorest countries. We should conduct an external performance audit ofthe thirteenth replenishment of IDA (IDA-13) results commitment, towhich the United States has tied its incentive contribution. We shouldfurther increase grant financing in the next replenishment of IDA, andthe IMF should consider transforming its financial assistance to low-income countries from loans to grants.

I’d like to conclude by acknowledging our progress in fighting ter-rorist financing and in rebuilding the infrastructure and economies ofAfghanistan and Iraq.

We have made important progress in protecting our citizens fromterrorism by restricting terrorist financing and money laundering. Ipraise the World Bank, the IMF, and Financial Action Task Force fortheir ongoing contributions and look forward to a continuation of theirwork. In addition to denying terrorists access to the formal financialnetworks, we must also ensure that informal sectors are not havens forterrorist funds.

With regard to Iraq, the task of reconstruction and recovery is enor-mous. Substantial work remains before private-sector-led growth canbring greater opportunity to the Iraqi people. I am looking forward tonext month’s meeting in Madrid, where I hope to see the internationalcommunity demonstrate its sustained commitment to Iraq.

Finally, I have just come from a trip to Kabul. Reconstruction ismoving apace. To ensure success, however, the Afghan governmentneeds the full support of the international community. The UnitedStates is doubling its commitment to Afghanistan over the next year.

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VENEZUELA: JORGE GIORDANIGovernor of the Bank

Development today, to those who are neediest, means empower-ment, and underdevelopment cannot be eliminated unless internationalorganizations radically and profoundly alter their thinking.

The world order established following the second World War, nowmore than fifty years in the making, must be substantially overhauled sothat the poorest members of society can benefit from what we call glob-alization. Recent world summits, including the one just concluded inCancun, Mexico, demonstrate the need to find other solutions. Contra-dictory talk of trade liberalization and agricultural subsidies ultimatelywill get us nowhere, and their proponents must begin—frankly andtransparently—to make the adjustments required to establish new tiesbetween developed countries and underdeveloped countries. It isabsolutely essential that the latter participate and receive an adequatehearing if we are to forge agreements that are just and beneficial to all.

Underdevelopment and poverty are two sides of the same coin.Underdevelopment results when the productive structure of societycannot adequately resolve the urgent problems of the majority of thepopulation. Poverty is the most humiliating manifestation of the historyof mankind, just barely past the dawn of the new millennium.

What will be done for the millions upon millions of human beingswho are being pushed aside as technological advances astound even themost distracted observers?

This situation is a challenge to the community of nations, and to thismeeting in particular, which we hope will continue to prove meaningfuldespite the judgments of the skeptics, who repeatedly view summit aftersummit with astonishment and disbelief. Indeed, we must have theaudacity to acknowledge realities that reason and mankind cannotaccept, and to confront the relentless waste of countless lives.

The challenges we face must spur us to find new alternatives, and wewill find them if our quest for justice is sincere: we must recognize thesubstantive rights of women, acknowledge that human activity threat-ens to destroy the environment, acknowledge the rights of nation-statesin the throes of global crisis, and confront the need to attack the prob-lem of structural unemployment throughout the world. We cannotaccept that we are doomed to fail. The World Bank and the Interna-tional Monetary Fund must therefore take stock of their situation, theirshortcomings, and their mistakes. The current global structural crisiswill never end unless we recognize the need for a major shift in power atthe global level. As citizens of a free and sovereign world, we musttherefore create room for innovative, creative, and bold solutions. Thatquest is part of our commitment to life, thought, and action.

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New hopes are blossoming now in Latin America and theCaribbean, and they must be very carefully nurtured if the manifestpoverty and longstanding frustration of our people are truly to beaddressed, and not merely observed. It is time to act. The goals for 2015,2030, and 2045, and for decades beyond, cannot remain mere highideals. This is also a task the World Bank must undertake if it is to sur-vive, and the subject must remain permanently on the DevelopmentCommittee’s agenda, and it must be addressed. There is more than onesolution, and we must also reject the idea that there is no alternative.The world’s people are waging a relentless struggle for dignity, respect,and sovereignty.

A new millennium in the history of mankind has only just begun. Itis time for us to act resolutely to create a more equitable and more justworld characterized by genuine and effective coexistence. We are con-vinced that we must devote all our energies and efforts to achieve thisgoal, and we will be guided by this objective.

VIETNAM: LE DUC THUYGovernor of the Fund

On behalf of the delegation of the Socialist Republic of Vietnam, Iwould like to express our sincere appreciation to the management ofthe International Monetary Fund (IMF) and the World Bank Group,the organizers, and especially the government and people of the UnitedArab Emirates for their excellent arrangements for the member coun-tries to attend these meetings of the Fund and the Bank in Dubai.

Regional and global economies have experienced numerous difficul-ties resulting from political instability in a number of regions, increasesin oil price at the end of 2002 and early 2003, and the impacts of SARS.In the short run, the global economy may face many major challenges,such as an imbalance in the global balance of payment, volatility instock markets, and (in particular) continuing instability in some areas inthe Middle East. However, it is good to note that in recent months theworld economy has showed signs of recovery and that it is expected tocontinue to grow at the rate of 4 percent in 2004. Given the recent over-all picture of the global economy, the emerging Asian economiesremain shining spots with an expected growth rate of 6 percent in 2003.

So far, the IMF and the World Bank have made a number of signifi-cant efforts, notably the IMF’s effort to enhance crisis prevention andresolution, and the World Bank’s effort to support sound policies withadequate and appropriate financing and to recommend specific solu-tions to enhance the voice and participation of developing and transi-tion countries. It is notable that the Independent Evaluation Office wasestablished in the Fund to help the Fund better understand the member

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countries and to help member countries enhance their ownership. Wehope that the office will play an important role in promoting dialoguesbetween the Fund and member countries—dialogues that truly reflectthe voice of member countries and that are needed to align the Fund’sassistance and associated conditions with the economic, cultural, politi-cal, and legal conditions of each beneficiary country.

Among the developing countries in Asia, Vietnam remains a coun-try recording sustainable and high economic growth. Its gross domesticproduct (GDP) growth rate was 7.04 percent in 2002 and is expected tobe 7.1 percent in 2003. Prudent and flexible monetary policy not onlyhelps keep the macro economy stable but also accelerates economicdevelopment. The inflation rate was controlled at 4 percent per annumin 2002, and the same level is expected in 2003. The industrial sectorcontinues to enjoy a high growth rate, thus creating favorable condi-tions for sustainable economic growth. Other real sectors such as agri-culture, forestry, and fishery have experienced structural shifts andreached a relatively high growth rate. These achievements not only helpthe country meet the demand of domestic consumption but also boostexports. As a result of high economic growth, budgetary revenues in2002 and early 2003 substantially improved, sustaining budgetaryexpenditures, especially for poverty reduction, health, and education,for which targets have been met.

To achieve socioeconomic targets for 2003—namely, a GDP growthrate of 7 to 7.5 percent—total export and import value must increase by7.5 to 8 percent, maximum CPI must be 5 percent, 1.5 million jobs mustbe created, and the poverty rate must be reduced to 12.5 percent. Thegovernment of Vietnam continues to make its best effort to maintaineconomic growth at a high and sustainable rate; mobilize and fully uti-lize all development resources; enhance competitiveness of enterprises;continue reform of state-owned enterprises and banking sectors (alongwith promoting development of private and small and medium-sizeenterprise sectors); effectively implement commitments and roadmapsfor international economic integration (particularly in preparing ade-quate conditions for accession to the World Trade Organization); fur-ther develop and improve the quality of education, health, and training;and accelerate poverty reduction.

Significant contributions to our encouraging achievements havebeen made by the Fund, the Bank, and bilateral donors through thePoverty Reduction and Growth Facility (PRGF) and the PovertyReduction Support Credit (PRSC) programs and in the form of financ-ing for key development projects in socioeconomic infrastructure andpoverty reduction. The government highly appreciates the approval ofthe Bank for the PRSC II for Vietnam. With respect to the PRGF pro-gram, we continue to pursue the targets and conditions initially agreed

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on by the government of Vietnam and the IMF, and we believe that themanagement of the Fund continues to provide us with valuable support.

I would like, on behalf of the government and the people of theSocialist Republic of Vietnam, to express our sincere thanks not only tothe Fund and the Bank but also to the entire international financialcommunity for their continuous active support and assistance to Vietnam.

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CONCLUDING REMARKS BY JAMES D. WOLFENSOHNPRESIDENT OF THE WORLD BANK GROUP

May I start first by thanking you, Mr. Chairman, for your admirablechairmanship and the efficiency which one expects from a Swiss chair-man in running these meetings. We’ve gone through very well, and Iappreciate very much your contribution.

I certainly think these meetings have been a very important mile-stone in the fight against poverty, and I think we have managed, withthe contributions of the Managing Director, and, to a limited extent,myself, and in particular the contributions of the Governors, to focus inon key issues. I think we started with the question of growth and thequestion of economics which are so critical and had excellent reviews ofthat in the IMFC meetings and then a further review and an adaptationat the Development Committee meetings. And I think that there was areaffirmation by everybody that the issue of development and that theissue of poverty is central to the prospects of peace on our planet.

We started, of course, with the Millennium Development Goals andthe agreements that had been reached in Monterrey and Johannesburg,and what I was impressed by was the real agreement on the part of every-body that development is a partnership between developed and develop-ing countries and that the basis of this partnership, the basis of thecontract, has clearly been established and is understood. This is a real stepforward in terms of integrating the U.N. resolutions with our own work.

There was also the sense of urgency in dealing with the questions ofdevelopment and the issue of poverty. I got the impression that bothsides of the planet, the rich and the poor, have come to recognize thatthey need to fulfill the obligations that were articulated at the time ofMonterrey and Johannesburg.

It became clear that many countries, to achieve the MillenniumDevelopment Goals, have both to fulfill their own obligations, but thatif they do that the current levels of aid and assistance are not sufficientto allow the goals to be achieved. While this is a delicate subject and adifficult one, particularly when we’re talking about a $16 billion incre-ment in the next several years, it was taken on board by the developedcountries that one needs to revisit the three questions that are all com-pletely interrelated: the question of trade; the question of aid; and thequestion of debt relief. These are three issues which are, in a curiousway, the same issue. It is the issue of transference of resources, the issueof interdependence between countries.

There was good acceptance this time of the agreements that werereached in Rome to push forward on the matters of coordination andsimplifying procedures within the development field. There is now a

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very conscious effort, different from the level that we’ve had previously,that Ministers of Finance and Ministers of Development now realizethat it’s in all our interest to come together in pursuit of the Romeagenda.

It was clear that many regarded the meetings in Cancun as a setback.Setback or not, it was an attempt to look at the balance of power inthese negotiations. Most importantly, a sense that we should return to amultilateral and rule-based system as soon as possible and get the nego-tiations going again. A big disaster would be to move towards bilateral-ism and protectionism as a result of this negotiating position. I cameaway encouraged that in all the meetings, talking to many of the partic-ipants, it sounded to me as though there was a very strong desire to getback to a multilateral negotiation.

On the question of voice in our institutions, and certainly speakingfor my own and my friend Horst Kohler—I’ve no doubt we’ll talk aboutthe Fund in a minute—I think there was general recognition that we’vetaken substantial steps in terms of trying to build capacity in offices withit. The capacity issue goes well beyond the issue of the number ofpeople that are residing in Washington at any time, or the number ofpeople that we are seeking to have for a few months to build up theirexperience.

The issue of capacity, I think, emerged very centrally. Then, as theGovernor speaking on behalf of Africa just said, there seems now to bea general agreement that finally, finally we will get on to the question ofcapacity building in Africa in a serious way. Ever since I’ve beenaround, which is eight years, we’ve been talking about capacity build-ing. We have made some steps, but unless this is really grasped in themost effective and sensitive way, I think there’s not a lot of hope for usbuilding capacity in the way that so many people would want.

And on the question of voting, we’re in the hands, at least in theDevelopment Committee, of our chair Trevor Manuel, because this isan issue for our shareholders, and Chairman Manuel, I think, is keen togive this a push forward.

So as we go out of here, I come away with a feeling that we need tofollow up on the question of the levels of aid, and we’ve been asked toreview with our colleagues in the Fund the Brown proposal for the IFFand other alternative pursuits to raise funding. We’re working furtheron the question of the agenda from Rome, and there we’re workingclosely also with our colleagues in the DAC. We’re looking at the issueof scaling up, and there will a meeting next May in Shanghai, which Ithink has created quite a lot of interest as we move into the question ofhow we can take good projects, do them in scale and manage them overtime.

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I think everybody agreed that we need to look at the particulars ofthe Millennium Development Goals and make sure that on discreteprograms such as the Education for All initiative we don’t get blockedby lack of contribution. The Infrastructure Action Plan that we areaddressing is important, and I think people seem to be reassured thatthe IFC and MIGA and the Bank contributions were useful and, addi-tionally, that the pursuit of funding for the World Bank—for the WorldPanel on Water was something that we should pursue.

Then, finally, Mr. Chairman, I would simply like to thank verywarmly the staff of the IMF and the World Bank who have worked sodiligently in relation to these meetings, as well as the team from Dubai2003. They have done a magnificent job. And once again, I would like tosay that I feel very grateful to our hosts from the United Arab Emiratesfor the remarkable job that they did in allowing us to have a successfulmeeting. I think the meeting has not only been a success for us as par-ticipants, but I very much hope that it has caused the world to take a dif-ferent view of this region as being much more than a region of troublebut a region which has hope and great potential.

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CONCLUDING REMARKS BY THE CHAIRMAN THE HONORABLE KASPAR VILLIGER

My fellow governors, once again we come to the end of our annualdeliberations on issues that are having and will continue to have a pro-found impact on the lives of those we represent. Before we go our sepa-rate ways, let us take a few moments to review some of the many usefulpoints that have been raised. Although a number of important issueswere discussed over the last few days, several of them stood out andshould be reiterated. They are related to the global economic outlook,surveillance, trade, the Millennium Development Goals (MDGs), andthe Poverty Reduction Strategy process.

First, we expressed our optimism that the global economy appearsto be recovering. However, we underscored that the recovery remainsfragile and that uncertainties remain. Policymakers must continue toimplement sound polices if the recovery is to take firm hold and confi-dence in the global economy is to be restored. It is our shared view thateach country should meet its responsibilities to ensure higher growth. Inthis regard, we noted the importance of reducing fiscal imbalances andpursuing structural reforms in a more vigorous manner.

Second, we emphasized the importance of strengthened and effec-tive Fund surveillance to strengthen the resilience of the internationalfinancial system and promote sustainable growth. We identified anumber of key issues that could improve the quality and effectiveness ofsurveillance, including looking more closely at progress on structuralreforms and on the sustainability of medium-term frameworks, reduc-ing vulnerabilities and improving debt sustainability analysis, andencouraging policy measures to reduce global imbalances. We also fur-ther underscored the importance of increased transparency and greatercandor in the IMF’s advice to its members.

Third, on trade, we emphasized the role greater trade liberalizationcan play in raising global growth and reducing poverty. However, weregretted the slow progress in reaching a conclusion to the DohaRound, particularly the recent breakdown of talks at Cancún. Westressed the importance of greater flexibility and political will on allsides to get the round back on track as soon as possible.

Fourth, we noted that progress toward achieving the MillenniumDevelopment Goals by 2015 needs to be accelerated. As discussed atMonterrey, this daunting task requires a well-balanced combination ofgood policies on the part of developing countries as well as increasedresources from developed nations to finance growth, development, andpoverty reduction. In this context, many of us stressed the importanceof doing more to enhance the voice and participation of developing

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and transition countries in the decision-making of the Bretton WoodsInstitutions.

Fifth, and closely related to the MDGs, is the issue of the PovertyReduction Strategy Paper (PRSP) process and the Heavily IndebtedPoor Countries (HIPC) Initiative. Many of us welcomed the progressthat has been made in making the PRSP process an effective vehicle forfighting poverty. However, there is still much room for improvement.Among other things, we suggested that poverty reduction strategiesshould include trade-related priorities and must be integrated in policyformulation and budget planning processes to be effective. We also saidthat it is important to monitor how the developing countries and thedonor community are carrying out their respective roles in the imple-mentation of the PRSP process.

More generally, we encouraged the World Bank and the Fund to col-laborate more closely. This collaboration is already working well inmany areas, such as in their work on post-conflict countries, providingvaluable technical assistance, and their efforts to combat the threatsposed by money laundering and the financing of terrorism. We alsocommended the World Bank for its Infrastructure Action Plan.

All of the issues that we have raised over the last few days, not onlythe ones that I have just mentioned, are important. They cannot andshould not be ignored. We have developed various strategies over thepast few years at Johannesburg, Monterrey, and Doha. What is left nowis to implement them in a bold manner if we are to achieve the MDGsand successfully defeat what is probably our oldest and most difficultchallenge, a significant reduction in poverty. Meeting the hopes that wehave raised and delivering on our promises will require a concertedeffort on all parts, developing, transition, and developed countriesalike. Each of us is like a railroad car of a train trying to get to the top ofa mountain. But, none of us can do it alone. Each of us, no matter howlarge or small, needs to act as a locomotive so that collectively we cangenerate the power necessary to reach the top. I call on each of you toexert the influence that you have in your capitals to encourage thecooperation and partnership that is so necessary.

I must thank you for your support during my tenure as chairman ofthese meetings. I would also like to pay tribute to the leadership demon-strated by Mr. Wolfensohn and Mr. Köhler in positioning the Bank andthe Fund to continue playing crucial roles in promoting macroeconomicstability and sustainable development, including in post-conflict coun-tries, such as Iraq and Afghanistan. We also appreciate the commitmentand the dedication of the staffs of our two institutions in carrying outtheir vital work.

We express our deepest appreciation to Mr. Ofosu-Amaah andMr. Anjaria, as well as to the staff of the Joint Secretariat, particularly

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Ms. Patricia Davies, for the excellent arrangements for these meetings.To the staff that was assigned to me in the Office of the Chairman, I say“thank you” for your valuable assistance.

On behalf of all of us, I express our sincere gratitude to the Dubaiauthorities and the government of the United Arab Emirates for hostingour meetings in this vibrant city. In this regard, we must acknowledge thetireless efforts of the planning and organizing committee, Dubai 2003,for the excellent job it has done. We will not soon forget the warm hospi-tality and friendly reception that we received from everyone in Dubai.

I would like to congratulate the governor of Singapore, who suc-ceeds me as chairman of the Boards of Governors. I also thank him forthe kind words he has just extended to me.

I wish you safe travels home, and I look forward to seeing you inWashington, D.C. next year.

SINGAPORE: LIM HNG KIANGGovernor of the Bank

Singapore is honored to accept the chairmanship of the Boards ofGovernors of the World Bank Group and the International MonetaryFund for the coming year. Singapore’s chairmanship underscores ourcommitment to the critical role of the Bretton Woods Institutions inpromoting a sound international financial system and reducing povertyworldwide.

Fellow governors, I am sure you will join me in thanking the Honor-able Kaspar Villiger for his skillful and efficient conduct of this year’smeetings.

Our discussions this year have touched on a number of importantissues. The global economy seems to be in the nascent stages of a recov-ery. But we must continue to pursue sound policies to ensure that thisrecovery is sustained. And while the macroeconomic outlook hasbrightened, several important challenges remain. We must intensify ourefforts to implement our Monterrey commitments, make meaningfulprogress toward meeting the Millennium Development Goals, and givenew impetus to take forward the Doha trade round.

I would like to take this opportunity to thank President Wolfensohnand Managing Director Köhler and their dedicated staff for carryingout their work in such an effective and efficient manner. I would alsolike to convey our appreciation to our hosts—the government andpeople of the United Arab Emirates and Dubai—for their warm hospi-tality and excellent organization. The planning and execution for theDubai meetings will serve as a model for us in Singapore, which as youknow has the honor of hosting the Annual Meetings in 2006.

I look forward to seeing all of you next year in Washington, D.C.

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DOCUMENTS OF THE BOARDS OF GOVERNORS

SCHEDULE OF MEETINGS1,2,3

TuesdaySeptember 23 10:00 a.m. Opening Ceremonies

Address from the ChairAnnual Address by President,World Bank Group

Annual Address by Managing Director, International Monetary Fund

3:00 p.m. Annual Discussion

WednesdaySeptember 24 9:30 a.m. Annual Discussion

3:00 p.m. Annual Discussion4

Following the conclusion Procedures Committees Reportsof the Annual Discussion Comments by Heads

of OrganizationsAdjournment

1 The Meetings were held in the Dubai International Convention Centre (DICC) andall sessions were joint sessions.

2 The International Monetary and Financial Committee and Development Committeemet on Sunday, September 21, and Monday, September 22, respectively.

3 The World Bank Group consists of the following:International Bank for Reconstruction and Development (IBRD)International Finance Corporation (IFC)International Development Association (IDA)International Centre for Settlement of Investment Disputes (ICSID)Multilateral Investment Guarantee Agency (MIGA)

4 The 2003 Annual Meetings were adjourned at the conclusion of Wednesday’smorning session; no afternoon session was held.

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PROVISIONS RELATING TO THE CONDUCT OF THE MEETINGS1

ADMISSION1. Sessions of the Boards of Governors of the World Bank Group and the

International Monetary Fund will be joint and shall be open to accred-ited press, guests and staff.

2. Meetings of the Joint Procedures Committee shall be open only to Gov-ernors who are members of the Committee and their advisers, ExecutiveDirectors, and such staff as may be necessary.

PROCEDURES AND RECORDS3. The Chairman of the Boards of Governors will establish the order of

speaking at each session. Governors signifying a desire to speak will gen-erally be recognized in the order in which they ask to speak.

4. With the consent of the Chairman, a Governor may extend his statementin the record following advance submission of the text to the Secretaries.

5. The Secretaries will have verbatim transcripts prepared of the proceed-ings of the Boards of Governors and the Joint Procedures Committee.The transcripts of proceedings of the Joint Procedures Committee willbe confidential and available only to the Chairman, the President of theWorld Bank Group, the Managing Director of the International Mone-tary Fund, and the Secretaries.

6. Reports of the Joint Procedures Committee shall be signed by the Com-mittee Chairman and the Reporting Members.

PUBLIC INFORMATION7. The Chairman of the Boards of Governors, the President of the World

Bank Group and the Managing Director of the International MonetaryFund will communicate to the press such information concerning theproceedings of the Annual Meetings as they may deem suitable.

1 Approved on March 13, 2003 pursuant to the By-Laws, IBRD Section 5(d), IFCSection 4(d) and IDA Section 1(a).

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AGENDA

IBRD1

Annual ReportFinancial Statements and Annual AuditAllocation of FY2003 Net IncomeAdministrative Budget for FY2004Annual Report of the Development CommitteeForthcoming Annual Meetings of Boards of Governors—Change

of 2004 Annual Meetings DatesSelection of the Members of the Joint Procedures Committee

and its Officers for 2003–2004

IFC1

Annual ReportFinancial Statements and Annual AuditAdministrative Budget for FY2004Membership of Bhutan

IDA1

Annual ReportFinancial Statements and Annual AuditAdministrative Budget for FY2004

MIGA2

Annual ReportFinancial Statements and Annual AuditSelection of the Members of the MIGA Procedures Committee

and its Officers for 2003–2004

A meeting of the Joint Procedures Committee was held on Monday,September 22, 2003, at 5:00 p.m. followed by a meeting of the MIGA Procedures Committee.

1 Approved on September 4, 2003 pursuant to the By-Laws, IBRD Section 5(a), and5(b), IFC Section 4(a), and 4(b), IDA Section 1(a).

2 Approved on September 4, 2003 pursuant to Section 4(a) of the MIGA By-Laws.

207

JOINT PROCEDURES COMMITTEE

Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SwitzerlandVice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . . . Chad

ThailandReporting Member . . . . . . . . . . . . . . . . . . . . . . Pakistan

MEMBERS

Benin PakistanBrazil PortugalCambodia St. Kitts and NevisChad Saudi ArabiaCyprus SwazilandDenmark SwitzerlandFrance ThailandGermany United KingdomIndia United StatesJapan UruguayLuxembourg VenezuelaMalawi

208

REPORT OF THEJOINT PROCEDURES COMMITTEE

REPORT I

September 22, 2003

At the meeting of the Joint Procedures Committee held on September 22,2003, items of business on the agendas of the Boards of Governors ofthe Bank, IFC, and IDA were considered.

The Committee submits the following report and recommendationson Bank and IDA business:

1. 2003 Annual Report

The Committee noted that the 2003 Annual Report and the activi-ties of the Bank and IDA had been discussed at these Annual Meetings.

2. Financial Statements, Annual Audits, and Administrative Budgets

The Committee considered the Financial Statements, Accountants’Reports, and Administrative Budgets contained in the 2003 Bank andIDA Annual Report, together with the Report dated June 26, 2003.

The Committee recommends that the Boards of Governors of theBank and IDA adopt the draft resolutions. . . .1

3. Allocation of Net Income of the Bank

The Committee considered the Report of the Executive Directorsdated July 31, 2003 on the Allocation of FY03 Net Income. . . .2

The Committee recommends that the Board of Governors of theBank adopt the draft resolution. . . .3

1 See page 217, 2222 See page 2293 See page 217

209

The Committee submits the following report and recommendationson IFC business:


The Committee noted that the 2003 Annual Report and the activi-ties of IFC had been discussed at these Annual Meetings.

2. Financial Statements, Annual Audit, and Administrative Budget

The Committee considered the Financial Statements and theAccountants’ Report contained in the 2003 Annual Report, and theAdministrative Budget attached to the Report dated June 25, 2003.

The Committee recommends that the Board of Governors of IFCadopt the draft resolution. . . .1

3. Membership of Bhutan

The Committee considered the Report of the Board of Directorsdated August 27, 2003 concerning Membership of Bhutan in IFC.

The Committee recommends that the Board of Governors adopt thedraft resolution. . . .2

Approved:

/s/ Kaspar Villiger /s/ Nawid AhsanSwitzerland—Chairman Pakistan—Reporting Member

(This report was approved and its recommendations were adopted by theBoards of Governors on September 24, 2003)

1 See page 2192 See page 219

210

REPORT III1

September 22, 2003

The Joint Procedures Committee met on September 22, 2003 andsubmits the following report and recommendations:

1. Development Committee

The Committee noted that the Report of the Chairman of the JointMinisterial Committee of the Boards of Governors of the Fund and theBank on the Transfer of Real Resources to Developing Countries(Development Committee) has been presented to the Boards of Gov-ernors of the Fund and Bank pursuant to paragraph 5 of ResolutionsNos. 29-9 and 294 of the Fund and Bank, respectively. . . .2

The Committee recommends that the Boards of Governors of theFund and the Bank note the report and thank the Development Com-mittee for its work.

2. Forthcoming Annual Meetings of Boards of Governors—Changeof 2004 Annual Meetings Dates

The Committee considered the Reports of Executive Directors ofthe Bank and Fund, dated September 2, 2003 and August 28, 2003,respectively, on changing the dates of the 2004 Annual Meetings of theBoards of Governors.

The Committee noted that a letter had been received from the Gov-ernor for the United States requesting to be recorded as abstaining onthe voting on these Resolutions.

The Committee recommends that the resolutions . . .3 to the saidreports be adopted, with this abstention recorded.

3. Officers and Joint Procedures Committee for 2003/2004

The Committee recommends that the Governor for Singapore beChairman, and that the Governors for Barbados and Greece be ViceChairmen, of the Boards of Governors of the Fund and of the WorldBank Group, to hold office until the close of the next Annual Meetings.

1 Report II related to business of the Fund2 See page 193 See page 218

211

It is further recommended that a Joint Procedures Committee beestablished to be available, after the termination of these meetings anduntil the close of the next Annual Meetings, for consultation at the dis-cretion of the Chairman, normally by correspondence and, if the occa-sion requires, by convening; and that this Committee shall consist of theGovernors for the following members: Barbados, Belgium, China,Colombia, Democratic Republic of Congo, France, Gabon, Germany,Greece, Guatemala, Japan, Nigeria, Norway, Papua New Guinea,Paraguay, Saudi Arabia, Singapore, Spain, Ukraine, United Kingdom,United States, Republic of Yemen, and Zambia.

It is recommended that the Chairman of the Joint ProceduresCommittee shall be the Governor for Singapore and the Vice Chairmenshall be the Governors for Barbados and Greece and that the Governorfor Nigeria shall serve as Reporting Member.

Approved:



212

MIGA PROCEDURES COMMITTEE

Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SwitzerlandVice Chairmen . . . . . . . . . . . . . . . . . . . . . . . . . . Chad

ThailandReporting Member . . . . . . . . . . . . . . . . . . . . . . Pakistan

MEMBERS

Benin PakistanBrazil PortugalCambodia St. Kitts and NevisChad Saudi ArabiaCyprus SwazilandDenmark SwitzerlandFrance ThailandGermany United KingdomIndia United StatesJapan UruguayLuxembourg VenezuelaMalawi

213

REPORT OF THE MIGA PROCEDURES COMMITTEEREPORT I

September 22, 2003

At the meeting of the MIGA Procedures Committee held onSeptember 22, 2003, the items of business on the agenda of the Councilof Governors of MIGA were considered.

The Committee submits the following report and recommendationson MIGA business:


The Committee noted that the 2003 Annual Report and the activi-ties of MIGA had been discussed at this Annual Meeting.

2. Financial Statements and Annual Audit

The Committee considered the Financial Statements and Accoun-tants’ Report contained in the 2003 Annual Report.

The Committee recommends that the Council of Governors adoptthe draft resolution. . . .1

3. Officers and Procedures Committee for 2003/2004

The Committee recommends that the Governor for Singapore beChairman and the Governors for Barbados and Greece be Vice Chair-men of the Council of Governors of MIGA to hold office until the closeof the next Annual Meeting.

It is further recommended that a Procedures Committee be estab-lished to be available, after the termination of this Annual Meeting anduntil the close of the next Annual Meeting, for consultation at the dis-cretion of the Chairman, normally by correspondence and, if the occa-sion requires, by convening; and that this committee shall consist ofthe Governors for the following members: Barbados, Belgium,China, Colombia, Democratic Republic of Congo, France, Gabon,Germany, Greece, Guatemala, Japan, Nigeria, Norway, Papua NewGuinea, Paraguay, Saudi Arabia, Singapore, Spain, Ukraine, UnitedKingdom, United States, Republic of Yemen, and Zambia.

1 See page 225.

214

It is recommended that the Chairman of the Procedures Committeeshall be the Governor for Singapore and the Vice Chairmen shall be theGovernors for Barbados and Greece and that the Governor for Nigeriashall serve as Reporting Member.

Approved



215

216

RESOLUTIONS ADOPTEDBY THE BOARD OF GOVERNORS OF THE BANK

BETWEEN THE 2002 AND 2003 ANNUAL MEETINGS

Resolution No. 550

First Amendment to the Agreement for the Establishment of the Joint Vienna Institute

RESOLVED:

THAT the Board of Governors hereby approves the First Amend-ment to the Agreement for the Establishment of the Joint Vienna Insti-tute between the Bank and other international organizations, the text ofwhich is set out in the Attachment to the Report of the ExecutiveDirectors dated January 22, 2003.

(Adopted March 6, 2003)

Resolution No. 551

Direct Remuneration of Executive Directors and their Alternates

RESOLVED:

THAT, effective July 1, 2003, the remuneration of the ExecutiveDirectors of the Bank and their Alternates pursuant to Section 13(e) ofthe By-Laws shall be paid in the form of salary without a separate sup-plemental allowance, and such salary shall be paid at the annual rate of$188,980 per year for Executive Directors and $163,470 per year fortheir Alternates.

(Adopted August 8, 2003)

RESOLUTIONS ADOPTEDBY THE BOARD OF GOVERNORS OF THE BANK

AT THE 2003 ANNUAL MEETING

Resolution No. 552

Financial Statements, Accountants’ Report and Administrative Budget

RESOLVED:

THAT the Board of Governors of the Bank consider the FinancialStatements, Accountants’ Report and Administrative Budget, includedin the 2003 Annual Report, as fulfilling the requirements of Article V,Section 13, of the Articles of Agreement and of Section 18 of the By-Laws of the Bank.

(Adopted September 24, 2003)

Resolution No. 553

Allocation of FY03 Net Income

RESOLVED:

1. THAT the Report of the Executive Directors dated July 31, 2003 on“Allocation of FY03 Net Income” is hereby noted with approval;

2. THAT the addition to the General Reserve of the Bank of $2,410million, plus or minus any rounding amount less than $1 million,and the reduction to the pension reserve of $29 million for the rea-sons given in the Report of the Executive Directors, are herebynoted with approval;

3. THAT the Bank transfer to the International Development Associ-ation, by way of a grant out of the FY03 net income of the Bank,$300 million, which amount may be used by the Association to pro-vide financing in the form of grants in addition to loans, such trans-fer to be made at such time and manner as decided by the ExecutiveDirectors;

217

4. THAT the Bank transfer to the HIPC Debt Initiative Trust Fund, byway of immediate grant out of the Bank’s net income, $240 million;and

5. THAT the Bank retain $100 million as surplus.


Resolution No. 554

Forthcoming Annual Meetings of the Boards of GovernorsChange of 2004 Annual Meetings Dates

RESOLVED:

THAT the 2004 Annual Meetings shall be convened in Washington,D.C. beginning on Monday, October 4, 2004, and that ResolutionNo. 546 shall be amended accordingly.


Resolution No. 555

Resolution of Appreciation

RESOLVED:

THAT the Boards of Governors of the World Bank Group and ofthe International Monetary Fund express their sincere appreciation tothe Government and people of the United Arab Emirates and to theAdministration and people of the Emirate of Dubai for their graciousand warm hospitality during these Annual Meetings;

THAT they express their gratitude for the outstanding facilities atthe Dubai International Convention Centre which were made availablefor the meetings; and

THAT they express their particular appreciation to the Governorsand Alternate Governors for the United Arab Emirates and to theirassociates for the many contributions which they have made towardensuring the success of the 2003 Annual Meetings.


218

RESOLUTIONS ADOPTEDBY THE BOARD OF GOVERNORS OF IFC


Resolution No. 237


RESOLVED:

THAT the Board of Governors of the Corporation consider theFinancial Statements, Accountants’ Report and Administrative Budget,included in the 2003 Annual Report and the Administrative Budgetattached to the Report dated June 25, 2003 as fulfilling the require-ments of Article IV, Section 11, of the Articles of Agreement and ofSection 16 of the By-Laws of the Corporation.


Resolution No. 238

Membership of Bhutan

WHEREAS, the Royal Government of Bhutan has applied foradmission to membership in the International Finance Corporation inaccordance with Section 1(b) of Article II of the Articles of Agreementof the Corporation; and

WHEREAS, pursuant to Section 17 of the By-Laws of the Corpora-tion, the Board of Directors, after consultation with representatives ofthe Royal Government of Bhutan, has made recommendations to theBoard of Governors regarding this application;

NOW, THEREFORE, the Board of Governors hereby

RESOLVES:

THAT the terms and conditions upon which Bhutan shall be admit-ted to membership in the Corporation shall be as follows:

1. Definitions: As used in this Resolution:(a) “Corporation” means International Finance Corporation.(b) “Articles” means the Articles of Agreement of the Corporation.

219

(c) “Dollars” or “$” means dollars in currency of the United Statesof America.

2. Subscription: By accepting membership in the Corporation, Bhutanshall subscribe to 720 shares of the capital stock of the Corporationat the par value of $1,000 per share.

3. Payment of Subscription: Before accepting membership in the Cor-poration, Bhutan shall pay $720,000 to the Corporation represent-ing payment in full for the 720 shares of the capital stock subscribed.

4. Information: Before accepting membership in the Corporation,Bhutan shall furnish to the Corporation such information relatingto its application for membership as the Corporation may request.

5. Effective Date of Membership: Bhutan shall become a member ofthe Corporation with a subscription as set forth in paragraph 2 ofthis Resolution as of the date when Bhutan shall have compliedwith the following requirements:(a) made the payment called for by paragraph 3 of this Resolution;(b) furnished such information as may have been requested by the

Corporation pursuant to paragraph 4 of this Resolution;(c) deposited with the International Bank for Reconstruction and

Development an instrument stating that it has accepted withoutreservation in accordance with its law the Articles and all theterms and conditions prescribed in this Resolution, and that ithas taken all steps necessary to enable it to carry out all its obli-gations under the Articles and this Resolution; and

(d) signed the original Articles held by the International Bank forReconstruction and Development.

6. Limitation on Period for Fulfillment of Requirements of Membership:Bhutan may fulfill the requirements for membership in the Corpo-ration pursuant to this Resolution until December 31, 2003, or suchlater date as the Board of Directors may determine.


220

Resolution No. 239


RESOLVED:





221

RESOLUTIONS ADOPTEDBY THE BOARD OF GOVERNORS OF IDA


Resolution No. 205


RESOLVED:

THAT the Board of Governors of the Association consider theFinancial Statements, Accountants’ Report and Administrative Budget,included in the 2003 Annual Report, as fulfilling the requirements ofArticle VI, Section 11, of the Articles of Agreement and of Section 8 ofthe By-Laws of the Association.


Resolution No. 206


RESOLVED:





222

RESOLUTIONS ADOPTEDBY THE COUNCIL OF GOVERNORS OF MIGA

BETWEEN THE 2002 AND 2003 ANNUAL MEETINGS

Resolution No. 64

Amendment to Resolution No. 57 of the Council of Governors

WHEREAS, pursuant to Resolution No. 57, entitled “1998 GeneralCapital Increase”, adopted on March 29, 1999, the Council of Gover-nors increased the authorized capital of the Multilateral InvestmentGuarantee Agency (“MIGA”) by SDR785,590,000, divided into 78,559shares (the “1998 GCI”) and provided that each eligible country (i.e.countries that signed MIGA’s Convention before March 29, 1999) couldsubscribe up to the number of shares specified in Resolution No. 57 inrespect of that country;

WHEREAS, paragraph 3 of Resolution No. 57 established a subscrip-tion period of up to March 28, 2002 for the subscription of shares allo-cated to eligible countries under the 1998 GCI;

WHEREAS, by Resolution No. 61, adopted on May 6, 2002, theCouncil of Governors extended the subscription period to the 1998 GCIuntil March 28, 2003;

NOW THEREFORE, the Council of Governors resolves that:

(a) Resolution No. 57 is amended so that eligible countries may, beforeMarch 28, 2003, subscribe to the shares allocated to them under the1998 GCI by depositing an Instrument of Contribution in a formsimilar to that attached;

(b) countries that deposit an Instrument of Contribution are requestedto pay for their GCI shares as soon as possible;

(c) voting power corresponding to the GCI shares shall accrue whenpayment for such shares is made;

(d) at appropriate intervals, the Board of Directors shall review thestatus of subscriptions and payments keeping in mind the objectiveof parity and may, at any time, recommend that the Council of Gov-ernors set a deadline for the payment of subscriptions;

(e) GCI shares that have not been subscribed to as prescribed in para-graph (a) shall be used for the purposes of achieving parity of votingpower between Category One and Category Two members, or if

223

parity of voting power has already been achieved, such shares maybe allocated, while maintaining parity, to countries that become sig-natories to MIGA’s Convention;

(f) the Management of the Agency shall present to the Board of Direc-tors by March 30, 2004 a proposal to achieve parity of voting power;

(g) until parity of voting power is achieved, any country listed in Sched-ule A to the Convention which decides to become a member ofMIGA shall do so by subscribing, at par, the number of shares setforth in that Schedule and in the manner set forth in the Convention.

(Adopted March 17, 2003)

Resolution No. 65

Amendment to MIGA’s By-Laws with Respect to Financial Statements

WHEREAS, pursuant to Resolution No. 1, entitled “Adoption ofBy-Laws”, adopted on June 8, 1988, the Council of Governors adoptedthe By-Laws of MIGA;

WHEREAS, Section 16 of the By-Laws, entitled “Budget andAudits” states in sub-paragraph (b) that a summary statement of theAgency’s financial position and a profit and loss statement showing theresults of its operations shall be circulated at appropriate intervals tomembers;

WHEREAS, in order to make the process of consideration of thefinancial statements consistent with the practice of the other membersof the World Bank Group;

NOW THEREFORE, the Council of Governors resolves that:

Section 16(b) of the MIGA By-Laws is deleted in its entirety and isreplaced with the following:

“(b) a summary statement of the Agency’s financial position and aprofit and loss statement showing the results of its operations shallbe submitted to the Council of Governors to be considered by themat their annual meeting; and”.

(Adopted April 3, 2003)

224

RESOLUTIONS ADOPTEDBY THE COUNCIL OF GOVERNORS OF MIGA


Resolution No. 66

Financial Statements and Accountants’ Report

RESOLVED:

THAT the Council of Governors of the Agency consider the Finan-cial Statements, and the Report of Independent Accountants includedin the 2003 Annual Report, as fulfilling the requirements of Article 29of the MIGA Convention and of Section 16(b) of the By-Laws of theAgency.


Resolution No. 67


RESOLVED:





225

REPORTS OF THE EXECUTIVE DIRECTORSOF THE BANK

January 22, 2003

First Amendment to the Agreement for the Establishment of the Joint Vienna Institute

1. The Joint Vienna Institute (JVI) is an international organizationformally established under the Agreement for the Establishment ofthe Joint Vienna Institute (Charter), which has been entered into byits sponsoring organizations, the Bank for International Settlements(BIS), the European Bank for Reconstruction and Development(EBRD), the International Monetary Fund (IMF), the Organizationfor Economic Cooperation and Development (OECD), the WorldTrade Organization (WTO), and the Bank. The JVI provides trainingto participants from former centrally planned economies in their tran-sition to market-based systems. It offers a variety of courses in eco-nomic and financial management and administration for publicofficials, training officers and private sector executives from transitioncountries in Europe and Asia.

2. A memorandum was submitted by the President to the ExecutiveDirectors on the JVI in February 1994 (Establishment of the JointVienna Institute, R94-24, February 23, 1994). The Board of Gover-nors subsequently approved the Charter between the Bank andother international organizations in April 1994 (Establishment ofthe Joint Vienna Institute, R94-68, April 27, 1994).

The Joint Vienna Institute: 1992 to 2002

3. The JVI began offering courses in 1992, functioning initially underinterim and informal arrangements. It received coordinated supportand assistance from its inception from five sponsoring internationalorganizations (BIS, EBRD, IBRD, IMF and OECD) and the Austrianauthorities. In 1994, it was formally established as an internationalorganization under the Charter. In 1998 the WTO became the sixthsponsoring international organization.

4. Since its inception in 1992, more than 14,000 participants from tran-sition countries have participated in training offered by the JVI.The training activities have included Introductory Courses inMarket Analysis, courses in Applied Economic Policy and a wide-ranging seminar program.

226

5. The JVI has benefited from substantial support from the sponsoringorganizations and other partners. The European Commission hasplayed an important role since the early development of the JVIand has financed, through its TACIS program, the delivery of Intro-ductory Courses for officials from TACIS countries, held at JVIcenters in Kiev, Moscow and Tashkent. Generous financial supportand cooperation has been provided also by the Austrian authorities,the European Central Bank, and a number of donor countries,including Belgium, the Czech Republic, Germany, Hungary, Italy,the Netherlands, Norway, Poland and Switzerland.

The Future of the Joint Vienna Institute

6. The IMF and the Austrian authorities signed a Memorandum ofUnderstanding (MoU) on the continuation of the JVI on March 13th,2002. The IMF is committed to using the JVI as its primary loca-tion for delivery of learning activities to transition countries in theECA region. The Austrian authorities agreed to find and upgradenew facilities for the JVI, and plan to increase their contributionto learning activities of the JVI. The IMF and the Austrian author-ities have in addition agreed to share the operating costs of theJVI.

7 It is expected that the IMF will continue to deliver 50% or more ofthe activities at the JVI. Some of the other sponsoring organizationsmay wish, on the other hand, to further reduce their involvement inthe JVI. In the early years of the JVI, the Bank, through the WorldBank Institute (then “Economic Development Institute” or“EDI”), was a major partner in the JVI’s activities. Since 1997, how-ever, the proportionate role of the Bank has steadily declined.

8 The Executive Board of the JVI (on which the Bank is represented)has proposed that the Charter be amended to reflect, inter alia, theimplications of changes in partners’ roles at the JVI. The proposedamendment to the Charter (First Amendment) is attached to thisreport as Attachment I, which shows the amendments from theoriginal text of the Charter black-lined. The principal proposedamendments are as follows:a. Expand the mandate of the JVI to explicitly include the Baltic

and Balkan countries, the members of the Commonwealth ofIndependent States and Asian transition countries (Article II,paragraph 1);

b. Provide for two categories of membership in the JVI: “PrimaryMembers” who will, inter alia, agree to share responsibility for

227

the operating costs of the JVI , and “Contributing Members”who will continue to participate in activities at the JVI but willnot share responsibility for the operating costs beyond theirproportionate use of the JVI (Article IV A);

c. Modify the representation of the members on the ExecutiveBoard of JVI to reflect the two categories of membership, withPrimary Members appointing two persons and ContributingMembers appointing one person to the Executive Board of JVI,and to provide that the Chairman of the Executive Board willbe elected from among the representatives of the PrimaryMembers and that the Vice-Chairman of the Executive Boardwill be elected from among the representatives of the Con-tributing Members (Article V, paragraphs 2(b)(i) and (c);

d. Modify the provisions for the votes needed for decisions of theExecutive Board to reflect the two categories of membership toprovide that certain specified decisions will require theapproval of all Primary Members and one ContributingMember if there is only one Contributing Member and twoContributing Members if there are two or more ContributingMembers (Article V, paragraph 2(f);

e. Remove the limited duration of the Charter (Article XV); andf. Opening the Charter to accession by the Republic of Austria

and providing that, upon accession, Austria will be a PrimaryMember (Article XVI, paragraph 2).

9. It is expected that the IMF and the Government of Austria will bePrimary Members and that most or all of the remaining sponsoringorganizations will choose to be Contributing Members. Manage-ment has advised the Executive Board of the JVI that the Bankwould choose to be a contributing member, subject to approval ofthe attached First Amendment by the Board of Governors.

10. Article V, Section 2(b)(v) of the Articles of Agreement of the Bankreserves to the Board of Governors the power to “(m)ake arrange-ments to cooperate with other international organizations (otherthan informal arrangements of a temporary and administrativecharacter).” Accordingly, the Executive Directors recommend thatthe Board of Governors adopt the draft resolution. . . .1

(This report was approved and the Board of Governors adopted its recommendation on March 6, 2003)

1 See page 216.

228

July 31, 2003

Allocation of FY03 Net Income

1. The General Reserve of the Bank as of June 30, 2003 was $19,132million. As of that date, the surplus of the Bank was $100 millionand the Special Reserve created under Article IV, Section 6 of theBank’s Articles of Agreement totaled $293 million. The Bank’sreported net income for the fiscal year ended June 30, 2003 (FY03)amounted to $5,344 million. The Bank’s Operating Income is usedas net income for annual net income allocation purposes. For FY03,Operating Income (which is the same as reported net income priorto FY01) was $3,021 million.

2. The Executive Directors have considered what action to take, or torecommend that the Board of Governors take, with respect to FY03net income. The Executive Directors have concluded that the inter-ests of the Bank and its members would best be served by the fol-lowing dispositions of the net income of the Bank:(a) the addition of $2,410 million to the General Reserve, plus or

minus any rounding amount less than $1 million;(b) the pension reserve should be reduced by $29 million, repre-

senting the excess of the accounting expense for the SRP andRSBP over the respective contribution amounts, which therebyincreases allocable net income correspondingly;

(c) the transfer to the International Development Association, byway of a grant of $300 million, which amount would be usable toprovide financing in the form of grants in addition to loans;

(d) the transfer to the HIPC Debt Initiative Trust Fund, by way ofimmediate grant, of $240 million to be used to provide debtrelief on debt owed to the International Development Associa-tion under the HIPC Debt Initiative framework; and

(e) the retention as surplus of $100 million.

3. Accordingly, the Executive Directors recommend that the Board ofGovernors note with approval the present Report and adopt thedraft resolution. . . .1

(This report was approved and its recommendation was adopted by theBoard of Governors on September 24, 2003)

1 See page 217.

229

REPORT OF THE BOARD OF DIRECTORS OF IFC

August 27, 2003

Membership of Bhutan

In accordance with Section 17 of the By-Laws of the InternationalFinance Corporation, the application of the Royal Government ofBhutan for membership in IFC is hereby submitted to the Board ofGovernors.

Representatives of the Royal Government of Bhutan have beenconsulted informally regarding the terms and conditions recommendedin the draft resolution and they have raised no objection thereto.

Accordingly, the Board of Directors recommends that the Board ofGovernors adopt the draft resolution . . .1

(This report was approved and the Board of Governors adopted its rec-ommendations on September 24, 2003)

1 See page 219.

230

REPORTS OF THE BOARD OF DIRECTORS OF MIGA

February 7, 2003

Proposed Amendment to Resolution No. 57 of the Council of Governors

1. On March 29, 1999, the Council of Governors of the MultilateralInvestment Guarantee Agency (MIGA) adopted Resolution No. 57entitled “1998 General Capital Increase” (1998 GCI)1 whichincreased the authorized capital of MIGA by SDR785,590,000,divided into 78,559 shares each having a par value of SDR 10,000(equivalent to US$850 million at the fixed rate of SDR1.00 =US$1.082). These 78,559 shares were allocated to 161 countries thatwere signatories to the Convention establishing MIGA (Conven-tion) as of March 29, 1999. Paragraph 3 of Resolution No. 57 estab-lished a subscription period of up to March 28, 2002.

2. At the end of the three year subscription period, only 66.25% of the$850 million had been subscribed to and only 66 of the 161 countrieseligible2 had fully or partially subscribed to the GCI shares allo-cated to them. In order to give eligible countries more time to sub-scribe to the GCI shares, on May 6, 2002, the Council of Governorsadopted Resolution No. 61 extending the subscription period to theGCI shares until March 28, 2003.

3. MIGA Management has held discussions with members concerningtheir unsubscribed GCI shares. Several countries have depositedletters of intent3 stating that they intend to subscribe to the GCIshares allocated to them under the 1998 GCI, but that they are notin a position to complete payment by the termination of theextended subscription period either due to budgetary constraints ortheir legislative processes. A number of other eligible countrieshave chosen not to subscribe altogether because they expected thatthey would not be able to meet the payment deadline. Thus, itappears that many eligible countries will not be able to completethe necessary procedures by March 28, 2003.

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1 A copy of Resolution No. 57 of the Council of Governors is attached.2 Countries that signed MIGA’s Convention before March 29, 1999.3 Hereinafter referred to as “Instrument of Contribution.”

4. During the extension of the subscription period, until January 24,2003, 15 countries paid fully for the GCI shares allocated to them, 2 countries have paid partially and 83 have not paid at all for the GCIshares allocated to them. As of January 24, 2003, of the 161 coun-tries entitled to subscribe, 78 countries (21 from Category One and57 from Category Two) have subscribed and paid US$622,723,460.As of date, 83 Category Two countries have not subscribed eitherfully or partially. All but 2 Category One countries have subscribedand paid in full for the GCI shares allocated to them. These twocountries have reiterated their intention to buy all the GCI sharesallocated to them and have confirmed their support for the success-ful completion of MIGA’s GCI.

5. Any decision on MIGA’s GCI has important repercussions onparity of voting power and membership. Article 39(c)(iii) of theConvention sets the principle of voting power parity between Cate-gory One and Category Two members. As a large number of Cate-gory Two members (83) have not subscribed or paid for the sharesallocated to them, the gap between the voting power of the Cate-gory One and Category Two countries could widen substantially.4

6. Adopting different procedures for subscription and payment wouldhelp to close the gap because it would give eligible Category Twocountries that have not been able to subscribe to their allocatedGCI shares an opportunity to do so over time.

7. By Resolution No. 55, adopted on May 14, 1998, the Council ofGovernors, postponed the review and reallocation of MIGA’sshares for the purpose of achieving parity of voting power until theexpiry of the subscription period to the 1998 GCI. Doing so imme-diately upon the termination of the subscription period on the basisof the GCI shares which have been subscribed and paid in fullwould prejudice the admission of new members. It is, therefore,proposed that Management engage in consultations with the share-holders regarding the issue of parity of voting power and make pro-posals to the Board by March 30, 2004.

8. Resolution No. 57 of the Council of Governors did not make a dis-tinction between subscription and payment. In the booklet entitled,Information on Subscription to Capital Stock under Council of

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4 As of January 24, 2003 Category One countries have 101,942 votes and CategoryTwo countries have 86,913 votes.

Governors Resolution No. 57, dated April, 1999, the Annex toAttachment I, entitled “Instructions for Payment of Subscriptions,”sets forth that—“Payment of the cash portion of the subscriptionincrease should be made at anytime within the three year subscrip-tion period.” In the present circumstances, it is in the interest ofMIGA to ensure full participation in its GCI in order to strengthenits capital base and to demonstrate the full support of its sharehold-ers. Therefore, it is proposed that eligible countries that so wish, beallowed to subscribe to the GCI shares by submitting an Instrumentof Contribution, in a form similar to the one attached to the pro-posed Resolution, before March 28, 20035. Countries that havedeposited an Instrument of Contribution should pay for their GCIshares as soon as possible. In the absence of an Instrument of Con-tribution received by MIGA from any eligible country beforeMarch 28, 2003, such country will be deemed to have waived suchright. Additional voting power corresponding to the subscribedGCI shares will accrue when payment for such shares is made.

9. Accordingly, the Board of Directors recommends that the Councilof Governors adopt the resolution . . .6 amending the subscriptionprocess set out in Resolution No. 57, by allowing eligible countriesthat so wish, to subscribe to the GCI shares allocated to them bysubmitting an Instrument of Contribution, in a form similar to theone attached to the proposed Resolution, before March 28, 2003. Itis proposed that countries that have deposited an Instrument ofContribution pay for their GCI shares as soon as possible. In theabsence of an Instrument of Contribution received by MIGA fromany eligible country before March 28, 2003, such country will bedeemed to have waived such right. Additional voting power corre-sponding to the subscribed GCI shares will accrue when payment ismade. GCI shares that shall not have been subscribed to as pre-scribed in paragraph (a) of the proposed Resolution shall be usedfor the purposes of achieving parity of voting power between Cate-gory One and Category Two members, or if parity of voting powerhas already been achieved, such shares may be allocated, whilemaintaining parity, to countries that become signatories to MIGA’sConvention. It is further recommended that the Council of Governors

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5 Article 39(f) of the Convention: “The Convention shall issue regulations regardingthe making of additional subscriptions under Section (e) of this Article. Such regu-lations shall prescribe reasonable time limits for the submission by members ofrequests to make such subscriptions.”

6 See page 223.

require that the Board of Directors review the status of subscrip-tions and payments of the GCI shares, at appropriate intervals,keeping in mind the objective of voting parity and recommend tothe Council of Governors to set a deadline for the payment of sub-scriptions, if necessary. It is also recommended that by March 30,2004 the Management of the Agency submit a proposal to achieveparity of voting power and that until parity of voting power hasbeen reached, Schedule A to the Convention remain in force. It isalso recommended that the other provisions of Resolution No. 57remain unchanged.

(This report was approved and the Board of Governors adopted its recommendation on March 17, 2003)

234

MULTILATERAL INVESTMENT GUARANTEE AGENCY

Resolution No. 57

1998 General Capital Increase

WHEREAS the original authorized capital stock of the Agencyamounted to One billion Special Drawing Rights (SDR 1 billion) at afixed value of 1.082 United States dollars per each SDR;

WHEREAS, in accordance with Article 5(c) of the Convention, theCouncil of Governors, may at any time, by special majority, increase thecapital stock of the Agency;

WHEREAS Article 39(e) of the Convention states:

In case the capital stock of the Agency is increased pursuant toSection (c) of Article 5, each member which so requests shall beauthorized to subscribe a proportion of the increase equivalent tothe proportion which its stock theretofore subscribed bears to thetotal capital stock of the Agency, but no member shall be obligatedto subscribe any part of the increased capital.

WHEREAS the Board of Directors has submitted a proposal to theCouncil of Governors for an increase in the authorized capital of theAgency;

WHEREAS the Board of Directors has proposed regulations forthe subscription by members of the additional capital, prescribing inaccordance with Article 39(f) “reasonable time limits for the submis-sion by members of requests to make such subscriptions”;

NOW THEREFORE the Council of Governors resolves as follows:

1. The authorized capital stock of the Agency shall be increased bySDR 785,590,000, divided into 78,559 shares, each having a parvalue of SDR 10,000. All payment obligations shall be settled on thebasis of the value of the SDR in terms of United States dollars at therate of exchange of SDR 1 equals US$1.082, as set forth in Article 5(a)of the Convention.

2. The provisions of this Resolution shall become immediately effec-tive when Governors exercising not less than two-thirds of the total

235

voting power representing not less than 55 percent of the subscribedshares of the capital stock of the Agency shall have voted in favor ofthis Resolution.

3. The subscription period shall commence on the date of approval ofthis Resolution and will cease three years thereafter. During thisperiod, each signatory to the Convention listed in the attachedAnnex, entitled “Allocation, Subscription and Payment of the 1998General Capital Increase,” may subscribe up to the number ofshares set forth opposite its name; provided those signatories thathave not completed their membership requirements before the endof the subscription period shall not be entitled to subscribe the addi-tional shares of capital stock. Members shall not be required tosubmit requests to subscribe the shares. It is understood that bymaking their payment each member has taken all necessary internallegislative steps to authorize its subscription of MIGA’s 1998 Gen-eral Capital Increase.

4. The subscription price shall be at par, and payment of subscriptionsshall be made as follows:

—17.65 percent cash in a “freely usable currency,” as defined inArticle 3(e) of the Convention; and

—82.35 percent subject to call by the Agency and payable in a“freely usable currency” when required to meet its obligations.

The Council of Governors encourages members to make the subscrip-tion increase payments in two installments, the first during the firstyear of the subscription period for 50 percent of the paid-in portion,and the balance during the second year of the subscription period.

5. Each member that subscribes the additional shares shall have oneadditional subscription vote for each share of the additional capitalsubscribed. No additional membership votes (apart from the 177membership votes that each member already has in accordancewith Article 39(a) of the Convention) shall be allocated to sub-scribers of the additional capital.

6. As set forth in Article 39(c) of the Convention, shares that remainunsubscribed at the end of the three-year subscription period shallbe utilized towards achieving parity of voting power between Cate-gory One and Category Two members.

(Adopted on March 29, 1999)

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ALLOCATION, SUBSCRIPTION AND PAYMENT OF THE 1998 GENERAL CAPITAL INCREASE

1. ALLOCATION OF SHARES AND SUBSCRIPTIONS

Number of FreelyAdditional Total Total Usable Callable

Shares Subscription Subscription Currency CapitalCOUNTRIES Allocated (in SDR) (in US$) (in US$) (in US$)

CATEGORY ONE:Australia 1,306 13,060,000 14,130,920 2,494,107 11,636,813Austria 591 5,910,000 6,394,620 1,128,650 5,265,970Belgium 1,547 15,470,000 16,738,540 2,954,352 13,784,188Canada 2,260 22,600,000 24,453,200 4,315,990 20,137,210Denmark 547 5,470,000 5,918,540 1,044,622 4,873,918Finland 457 4,570,000 4,944,740 872,747 4,071,993France 3,705 37,050,000 40,088,100 7,075,550 33,012,550Germany 3,865 38,650,000 41,819,300 7,381,106 34,438,194Greece 213 2,130,000 2,304,660 406,772 1,897,888Ireland 281 2,810,000 3,040,420 536,634 2,503,786Italy 2,150 21,500,000 23,263,000 4,105,920 19,157,080Japan 3,884 38,840,000 42,024,880 7,417,391 34,607,489Luxembourg 88 880,000 952,160 168,056 784,104Netherlands 1,653 16,530,000 17,885,460 3,156,784 14,728,676Norway 533 5,330,000 5,767,060 1,017,886 4,749,174Portugal 291 2,910,000 3,148,620 555,731 2,592,889Spain 980 9,800,000 10,603,600 1,871,535 8,732,065Sweden 800 8,000,000 8,656,000 1,527,784 7,128,216Switzerland 1,143 11,430,000 12,367,260 2,182,821 10,184,439United Kingdom 3,705 37,050,000 40,088,100 7,075,550 33,012,550United States 15,641 156,410,000 169,235,620 29,870,087 139,365,533Subtotal: 45,640 456,400,000 493,824,800 87,160,075 406,664,725

CATEGORY TWO:Albania 44 440,000 476,080 84,028 392,052Algeria 495 4,950,000 5,355,900 945,316 4,410,584Angola 143 1,430,000 1,547,260 273,091 1,274,169Argentina 956 9,560,000 10,343,920 1,825,702 8,518,218Armenia 61 610,000 660,020 116,494 543,526Azerbaijan 88 880,000 952,160 168,056 784,104Bahamas, The 76 760,000 822,320 145,139 677,181Bahrain 59 590,000 638,380 112,674 525,706Bangladesh 259 2,590,000 2,802,380 494,620 2,307,760Barbados 52 520,000 562,640 99,306 463,334Belarus 178 1,780,000 1,925,960 339,932 1,586,028Belize 38 380,000 411,160 72,570 338,590

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Benin 47 470,000 508,540 89,757 418,783Bolivia 95 950,000 1,027,900 181,424 846,476Bosnia and Herzegovina 61 610,000 660,020 116,494 543,526

Botswana 38 380,000 411,160 72,570 338,590Brazil 1,127 11,270,000 12,194,140 2,152,266 10,041,874Bulgaria 278 2,780,000 3,007,960 530,905 2,477,055Burkina Faso 47 470,000 508,540 89,757 418,783Burundi 56 560,000 605,920 106,945 498,975Cambodia 71 710,000 768,220 135,591 632,629Cameroon 82 820,000 887,240 156,598 730,642Cape Verde 38 380,000 411,160 72,570 338,590Chad 46 460,000 497,720 87,848 409,872Chile 370 3,700,000 4,003,400 706,600 3,296,800China 2,392 23,920,000 25,881,440 4,568,074 21,313,366Colombia 333 3,330,000 3,603,060 635,940 2,967,120Congo, Dem. Rep. of 258 2,580,000 2,791,560 492,710 2,298,850Congo, Republic of 50 500,000 541,000 95,487 445,513Costa Rica 89 890,000 962,980 169,966 793,014Cote d’Ivoire 134 1,340,000 1,449,880 255,904 1,193,976Croatia 143 1,430,000 1,547,260 273,091 1,274,169Cyprus 79 790,000 854,780 150,869 703,911Czech Republic 339 3,390,000 3,667,980 647,398 3,020,582Dominica 38 380,000 411,160 72,570 338,590Dominican Republic 112 1,120,000 1,211,840 213,890 997,950Ecuador 139 1,390,000 1,503,980 265,452 1,238,528Egypt, Arab Rep. of 350 3,500,000 3,787,000 668,406 3,118,594El Salvador 93 930,000 1,006,260 177,605 828,655Equatorial Guinea 38 380,000 411,160 72,570 338,590Eritrea 38 380,000 411,160 72,570 338,590Estonia 50 500,000 541,000 95,487 445,513Ethiopia 53 530,000 573,460 101,216 472,244Fiji 54 540,000 584,280 103,125 481,155Gabon 73 730,000 789,860 139,410 650,450Gambia, The 38 380,000 411,160 72,570 338,590Georgia 85 850,000 919,700 162,327 757,373Ghana 187 1,870,000 2,023,340 357,120 1,666,220Grenada 38 380,000 411,160 72,570 338,590Guatemala 107 1,070,000 1,157,740 204,341 953,399Guinea 69 690,000 746,580 131,771 614,809Guinea-Bissau 38 380,000 411,160 72,570 338,590Guyana 64 640,000 692,480 122,223 570,257



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Haiti 57 570,000 616,740 108,855 507,885Honduras 77 770,000 833,140 147,049 686,091Hungary 430 4,300,000 4,652,600 821,184 3,831,416India 2,323 23,230,000 25,134,860 4,436,303 20,698,557Indonesia 800 8,000,000 8,656,000 1,527,784 7,128,216Israel 361 3,610,000 3,906,020 689,413 3,216,607Jamaica 138 1,380,000 1,493,160 263,543 1,229,617Jordan 74 740,000 800,680 141,320 659,360Kazakhstan 159 1,590,000 1,720,380 303,647 1,416,733Kenya 131 1,310,000 1,417,420 250,175 1,167,245Korea, Republic of 342 3,420,000 3,700,440 653,128 3,047,312Kuwait 709 7,090,000 7,671,380 1,353,999 6,317,381Kyrgyz Republic 59 590,000 638,380 112,674 525,706Latvia 74 740,000 800,680 141,320 659,360Lebanon 108 1,080,000 1,168,560 206,251 962,309Lesotho 38 380,000 411,160 72,570 338,590Libya 418 4,180,000 4,522,760 798,267 3,724,493Lithuania 81 810,000 876,420 154,688 721,732Macedonia, FYR of 38 380,000 411,160 72,570 338,590Madagascar 76 760,000 822,320 145,139 677,181Malawi 59 590,000 638,380 112,674 525,706Malaysia 441 4,410,000 4,771,620 842,191 3,929,429Mali 62 620,000 670,840 118,403 552,437Malta 57 570,000 616,740 108,855 507,885Mauritania 48 480,000 519,360 91,667 427,693Mauritius 66 660,000 714,120 126,042 588,078Micronesia, Fed. St. of 38 380,000 411,160 72,570 338,590Moldova 73 730,000 789,860 139,410 650,450Mongolia 44 440,000 476,080 84,028 392,052Morocco 265 2,650,000 2,867,300 506,078 2,361,222Mozambique 74 740,000 800,680 141,320 659,360Namibia 82 820,000 887,240 156,598 730,642Nepal 53 530,000 573,460 101,216 472,244Nicaragua 78 780,000 843,960 148,959 695,001Niger 47 470,000 508,540 89,757 418,783Nigeria 643 6,430,000 6,957,260 1,227,956 5,729,304Oman 72 720,000 779,040 137,501 641,539Pakistan 503 5,030,000 5,442,460 960,594 4,481,866Palau 38 380,000 411,160 72,570 338,590Panama 100 1,000,000 1,082,000 190,973 891,027Papua New Guinea 73 730,000 789,860 139,410 650,450Paraguay 61 610,000 660,020 116,494 543,526



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Peru 284 2,840,000 3,072,880 542,363 2,530,517Philippines 369 3,690,000 3,992,580 704,690 3,287,890Poland 582 5,820,000 6,297,240 1,111,463 5,185,777Qatar 104 1,040,000 1,125,280 198,612 926,668Romania 423 4,230,000 4,576,860 807,816 3,769,044Russian Federation 2,391 23,910,000 25,870,620 4,566,164 21,304,456Rwanda 57 570,000 616,740 108,855 507,885Samoa 38 380,000 411,160 72,570 338,590Saudi Arabia 2,391 23,910,000 25,870,620 4,566,164 21,304,456Senegal 111 1,110,000 1,201,020 211,980 989,040Seychelles 38 380,000 411,160 72,570 338,590Sierra Leone 57 570,000 616,740 108,855 507,885Singapore 118 1,180,000 1,276,760 225,348 1,051,412Slovak Republic 169 1,690,000 1,828,580 322,744 1,505,836Slovenia 78 780,000 843,960 148,959 695,001Solomon Islands 38 380,000 411,160 72,570 338,590South Africa 719 7,190,000 7,779,580 1,373,096 6,406,484Sri Lanka 207 2,070,000 2,239,740 395,314 1,844,426St. Kitts & Nevis 38 380,000 411,160 72,570 338,590St. Lucia 38 380,000 411,160 72,570 338,590St. Vincent and the Grenadines 38 380,000 411,160 72,570 338,590

Sudan 157 1,570,000 1,698,740 299,828 1,398,912Suriname 63 630,000 681,660 120,313 561,347Swaziland 44 440,000 476,080 84,028 392,052Syrian Arab Republic 128 1,280,000 1,384,960 244,445 1,140,515Tajikistan 56 560,000 605,920 106,945 498,975Tanzania 107 1,070,000 1,157,740 204,341 953,399Thailand 321 3,210,000 3,473,220 613,023 2,860,197Togo 59 590,000 638,380 112,674 525,706Trinidad and Tobago 155 1,550,000 1,677,100 296,008 1,381,092Tunisia 119 1,190,000 1,287,580 227,258 1,060,322Turkey 352 3,520,000 3,808,640 672,225 3,136,415Turkmenistan 50 500,000 541,000 95,487 445,513Uganda 101 1,010,000 1,092,820 192,883 899,937Ukraine 582 5,820,000 6,297,240 1,111,463 5,185,777United Arab Emirates 284 2,840,000 3,072,880 542,363 2,530,517Uruguay 154 1,540,000 1,666,280 294,098 1,372,182Uzbekistan 133 1,330,000 1,439,060 253,994 1,185,066Vanuatu 38 380,000 411,160 72,570 338,590Venezuela 1,088 10,880,000 11,772,160 2,077,786 9,694,374Vietnam 168 1,680,000 1,817,760 320,835 1,496,925

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Yemen, Republic of 118 1,180,000 1,276,760 225,348 1,051,412Yugoslavia, Fed.Rep.of 176 1,760,000 1,904,320 336,112 1,568,208Zambia 242 2,420,000 2,618,440 462,155 2,156,285Zimbabwe 180 1,800,000 1,947,600 343,751 1,603,849Subtotal: 32,919 329,190,000 356,183,580 62,866,406 293,317,174GRAND TOTAL 78,559 785,590,000 850,008,380 150,026,481 699,981,899

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2. INSTRUCTIONS FOR PAYMENT OF SUBSCRIPTIONS

In accordance with the foregoing Resolution of the Council ofGovernors on the 1998 General Capital Increase, members will pay in17.65 percent of the shares allocated to them in a “freely usable cur-rency” and remain liable thereafter to a call on part or all of the balanceof shares to be paid in a “freely usable currency” when required by theAgency to meet its obligations. It is understood that by making theirpayment each member has taken all necessary internal legislative stepsto authorize its subscription of MIGA’s 1998 General Capital Increase.

Payment of the cash portion of the subscription increase should bemade anytime within the three-year subscription period. However, it isrecommended that members make their subscription increase pay-ments in two installments, the first during the first year of the subscrip-tion period for 50 percent of the paid-in portion, and the balance duringthe second year of the subscription period.

The authorized increase in the capital stock of the Agency shall be78,559 shares, each having a par value of SDR10,000. All payment obli-gations shall be settled on the basis of the value of the SDR in terms ofUnited States dollars at the nominal rate of exchange of SDR 1 =US$1.082, as set forth in Article 5(a) of the Convention.

Subscriptions shall be allocated to each eligible member as set forthin Section 1 of this Annex. Payments shall be made in a “freely usablecurrency,” shall be calculated at the market rate of exchange in effect onthe date of payment, and shall be deposited in MIGA’s account in thefollowing banking institutions:

For Payments in British Pounds Sterling:Bank of EnglandLondonAccount: Multilateral Investment Guarantee

Agency (MIGA) Account General

For Payments in Euro:Deutsche BundesbankFrankfurtAccount: Multilateral Investment Guarantee


For Payments in Japanese Yen:Bank of JapanTokyoAccount: Multilateral Investment Guarantee


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For Payments in U.S. Dollars:Federal Reserve BankNew York, N.Y.Attention: Foreign DepartmentAccount: Multilateral Investment Guarantee


Communications with MIGA

Members should address general correspondence or questions con-cerning the 1998 General Capital Increase to MIGA’s Corporate Secre-tary at the following address:

The Corporate SecretaryMultilateral Investment Guarantee Agency

MC11-3531818 H Street, N.W.

Washington, D.C. 20433U.S.A.

Telex: MCI 248423 (WORLDBANK)Fax: (202) 522-1642

(202) 522-1640

Specific questions on methods of payment may be addressed toMIGA’s Office of Central Administration at the following address:

Manager, Budgeting and AccountingOffice of Central Administration

Multilateral Investment Guarantee AgencyU12-017

1818 H Street, N.W.Washington, D.C. 20433

Telex: MCI 248423 (WORLDBANK)Fax: (202) 522-2660

(202) 522-2620

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MULTILATERAL INVESTMENT GUARANTEE AGENCY

1998 General Capital Increase

SUGGESTED FORM OF INSTRUMENT OF CONTRIBUTION

____________(Name of country) has at present ______ shares in thecapital stock of the Multilateral Investment Guarantee Agency andhereby intends to subscribe to _______ additional shares allocated to itunder the 1998 General Capital Increase. Payment for these shares willbe made as soon as possible. _____________ (Name of Country) under-stands that until payment is made, the additional votes corresponding tothese GCI shares will not accrue.

Sincerely,

_________________________Name:Title:For _____________(Name of country)

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January 8, 2003

Proposal to Amend MIGA’s By-Laws With Respect to Financial Statements

1. At present, MIGA’s financial statements are approved by the Exec-utive Vice President, on behalf of the President and are circulatedto members on the recommendation of the Audit Committee of theBoard of Directors. In their report for the fiscal year 2002, theexternal auditors noted that the other members of the World BankGroup are required to have their financial statements approvedby the Group’s Executive Directors and considered by the Boardof Governors at their annual meeting. Therefore, the external audi-tors recommended that MIGA adopt a similar process so as to beconsistent.

2. Article 29 of MIGA’s Convention, entitled “Accounts” states that“The Agency shall circulate to members at appropriate intervals asummary statement of its financial position and a profit and lossstatement showing the results of its operations.” Following the Con-vention, the By-Laws of MIGA, adopted on June 8, 1988 states inSection 16(b) that “a summary statement of its financial positionand a profit and loss statement showing the results of its operationsshall be circulated at appropriate intervals to its members.”

3. Section 16 of the By-Laws, entitled “Budget and Audits” also statesthat the Board of Directors adopt financial regulations that shallgovern the financial administration of the Agency. The FinancialRegulations, adopted by the Board of Directors on June 22, 1988addresses the issue of accounts and statements in Section 7(b)where it states that “At appropriate intervals, the President shallalso prepare and circulate to members a summary statement of theAgency’s financial position and a profit and loss statement showingthe results of the Agency’s operations.”

4. Based on the procedures set out in the By-Laws and the FinancialRegulations, the Agency has been circulating its financial state-ments to the Board of Directors and to the members. Since there isno requirement or mandate to submit the financial statements tothe Board of Directors for approval or to the Council of Governorsfor consideration at its annual meeting, it has not been done to date,although the Annual Report that incorporates the financial state-ments, is always circulated to the Board of Directors and the Councilof Governors.

245

5. During the meeting held on July 31, 2002, the Audit Committee ofthe Board requested that MIGA Management look at how its legalframework could be changed to make the process for approval ofthe financial statements consistent with the practice of the WorldBank Group. MIGA Management reviewed the legal frameworkof the other members of the World Bank Group for this purpose.Article V, Section 13(a) of the Articles of Agreement of the Inter-national Bank for Reconstruction and Development (“IBRD”)states that “The Bank shall publish an annual report containing anaudited statement of its accounts and shall circulate to members atintervals of three months or less a summary report of its financialposition and a profit and loss statement showing the results of itsoperations.” Based on the Articles of Agreement, Section 18 of theIBRD By-Laws states that “The Executive Directors shall have anaudit of the accounts of the Bank made at least once each year andon the basis of this audit shall submit a statement of its accounts,including a balance sheet and a statement of profit and loss, to theBoard of Governors to be considered by them at their annual meet-ing.” Similarly, Article IV, Section 11(a) of the Articles of Agree-ment of the International Finance Corporation (“IFC”) states that“The Corporation shall publish an annual report containing anaudited statement of its accounts and shall circulate to members atappropriate intervals a summary statement of its financial positionand a profit and loss statement showing the results of its opera-tions.” Based on the Articles of Agreement, Section 16 of the IFCBy-Laws states that “The Board of` Directors shall have an audit ofthe accounts of the Corporation made at least once each year andon the basis of this audit shall submit a statement of its accounts,including a balance sheet and a statement of profit and loss, to theBoard of Governors to be considered by it at its annual meeting.”The Articles of Agreement of the International DevelopmentAssociation (“IDA”) are very similar in this regard and state inArticle VI, Section 11(a) that “The Association shall publish anannual report containing an audited statement of its accounts andshall circulate to members at appropriate intervals a summary state-ment of its financial position and of the results of its operations.”Section 8 of the IDA By-Laws state that the provisions of Section 18of the By-Laws of the Bank shall apply mutatis mutandis. In thedocuments reviewed, the procedure for submitting the financialstatements to the Board of Governors at the annual meetings isclearly spelled out but there are no details regarding the approvalprocess. The practice is that the financial statements are approvedby the Board of Directors and then submitted to the Board of Gov-ernors for consideration at their annual meeting.

246

6. Section 16 (Budget and Audits) in the MIGA By-Laws does notspell out the requirement of submitting the financial statements tothe Council of Governors for consideration. It only states that thefinancial statements shall be circulated to members at appropriateintervals. Therefore, MIGA’s By-Laws should be amended so thatthe section on Budget and Audits is consistent with similar sectionsin the By-Laws of the other members of the World Bank Group.Section 16(b) of the MIGA By-Laws should be amended by delet-ing it in its entirety and replacing it with the proposed languagegiven below.

Present Section 16(b):“(b) a summary statement of the Agency’s financial position

and a profit and loss statement showing the results of itsoperations shall be circulated at appropriate intervals tomembers; and”

Proposed new Section 16(b):“(b) a summary statement of the Agency’s financial position

and a profit and loss statement showing the results of itsoperations shall be submitted to the Council of Gover-nors to be considered by them at their annual meeting;and”

7. Accordingly, the Board of Directors recommends that the Council ofGovernors adopt the draft Resolution . . .1 amending Section 16(b)of the MIGA By-Laws.

(This report was approved and the Board of Governors adopted its recommendation on April 3, 2003)

1 See page 224

247

248

ACCREDITED MEMBERS OF DELEGATIONS AT THE 2003 ANNUAL MEETINGS

Afghanistan

GovernorAshraf Ghani

Alternate GovernorAbdul Rahimy

AdviserM. AlawiMichael CarnahanTorek FarhadiClare LockhartBaqer MassoudR. Mohammadi

Albania

Alternate GovernorFatos Ibrahimi

AdviserErmira HaxhiGramoz Kolasi

Algeria

GovernorAbdellatif Benachenhou

Alternate GovernorAbdelhak Bedjaoui

AdviserHadia AmraneMessaoud BenzaidAbdelhamid BouzaherSid Ahmed Dib

Angola

GovernorAna Dias Lourenco

Alternate GovernorMarinela Martins Amaral*

AdviserPedro Luis Da FonsecaRui Miguens Oliveira

Maria Adelaide Pires de AlmeidaIrene Beatriz F. Sobrinho

Antigua and Barbuda#

GovernorWhitfield M. Harris Jr.

Argentina

GovernorAlfonso de Prat-Gay

Alternate GovernorOscar Tangelson

AdviserAlieto GuadagniPedro LacosteJorge Madcur

Armenia

GovernorVahram Nercissiantz

AdviserArmen MovsisyanArshak Poladian

Australia

GovernorPeter Costello

Alternate GovernorJanine Murphy

AdviserNoel CampbellTimothy John EldridgeMitchell Peter FifieldAlex FraserDavid HollyElizabeth McCabePaul MorganJulia Newton-HowesTerrence K. O’BrienGlenn StevensCharles Tapp

* Temporary<> Not a member of IFC# Not a member of IDA

249

Austria

Alternate GovernorPaul Kutos*Klaus Oehler*

AdviserKurt BayerNatalia Corrales DiezWalter MayrMatthias Winkler

Azerbaijan

GovernorAftandil Babayev

Alternate GovernorOktay Ali Oglu Hagverdiev

AdviserFaig Adil Oglu Mammadov

Bahamas, The#

GovernorMichael Halkitis

Alternate GovernorRuth R. Millar

AdviserAllison Gabriella FraserSimon D. Wilson

Bahrain#

GovernorAbdulla Hassan Saif

Alternate GovernorZakaria Ahmed Hejres

AdviserJasim AbdulaalIsa Abul Fath AliAnwar Al-SadahAhmed Bin Khalifa Al-KhalifaEbrahim Al-KhalifaIsa Abdulrahman AlthawadiAbdulkarim BuallayWaleed RashdanAbdul-Rahman Ali Saif

Bangladesh

GovernorM. Saifur Rahman

Alternate GovernorMirza Tasadduq Hussain BegAkbar Ali Khan*

AdviserKamrul AhsanM. Musharraf Hossain BhuiyaTarikul IslamMd. Mustafa KamalZakir Ahmed KhanKazi Nurun NabiMujtaba RizwanMirza Shamsuzzaman

Barbados

GovernorTyrone Emanuel Barker

Alternate GovernorGrantley W. Smith

Belarus#

GovernorAndrei V. Kobyakov

Alternate GovernorValery V. Tsepkalo*

AdviserSergey M. DidenkoGeorgy EgorovGennady MedvedevVadim Sergeevich MisyukovetsMikhail V. NikitsenkaVladimir SulimskyAlyaksandr SychovNikolai Zaichenko

Belgium

GovernorDidier Reynders

Alternate GovernorJean-Pierre Arnoldi*


250

AdviserGino AlzettaLaurent BurtonPaul CartierKurt DelodderMaurissens FrancoisBruno G. GuiotOlivier HeninPeter PraetDenis RondayMark Van Den Reeck

Belize

GovernorSaid W. Musa

Alternate GovernorHugh McSweaney

AdviserJorge M. Auil

Benin

GovernorBruno Amoussou

Alternate GovernorFatiou Akplogan

AdviserSemiou Bakary

Bhutan <>

GovernorLyonpo Wangdi Norbu

Alternate GovernorLam Dorji

Bolivia

GovernorJavier Comboni Salinas

Alternate GovernorRoberto Camacho

AdviserMatthew H. MartinAlfonso C. Revollo

Bosnia and Herzegovina

GovernorAdnan Terzic

Alternate GovernorDragan Doko*

AdviserKemal CausevicMirza HajricZlatko HurticDragan KovacevicKemal KozaricOmer Nukic

Botswana

GovernorBaledzi Gaolathe

Alternate GovernorSerwalo S.G. Tumelo

AdviserOntefetse Kenneth MatamboSolomon M. Sekwakwa

Brazil

GovernorOtaviano Canuto

Alternate GovernorJose Linaldo Gomes de AguiarAmaury Bier*Murilo Portugal*Flavio Sapha*

AdviserJose Ricardo da Costa Aguiar AlvesRubens V. AmaralOsanan Lima Barros FilhoRoberto de CamilloDaso Maranhao CoimbraViviane Pretti FeitosaJoao Batista do Nacimento

MagalhaesAugusto Brauna PinheiroRossano Maranhao PintoAlexandre A. Tombini


251

Brunei Darussalam<>#

Alternate GovernorAbdul Rahman Ibrahim

AdviserAbdullah BahrinMohd Arbi HamidZakaria Serudin

Bulgaria#

GovernorMilen Veltchev

Alternate GovernorNikolay Vassilev VassilevLydia Shouleva*

AdviserGergana BeremskaRadoslav BozadzhievDimiter IvanovksiIliya LingorskiTatiana MitovaPetyo NikolovSvetlana Dimitrova Panova

Burkina Faso

GovernorFrancois M. Zoundi

Alternate GovernorEtienne Yameogo

AdviserLassane Kabore

Burundi

GovernorAthanase Gahungu

Alternate GovernorDieudonne Nintunze

Cambodia

GovernorVissoth Vongsey

Alternate GovernorSokmuny Thao

AdviserPanhchaksokhavith Thuch

Cameroon

GovernorMartin Okouda

Alternate GovernorDaniel Njankouo Lamere

AdviserAminou BassoroCamille EkindiHenri EngoulouBlaise Essomba NgoulaRene T. Mbappou EdjengueleRoger Mbassa NdineLabarang MohamadouJean Claude NgbwaOusmanou OumarouJean TchoffoPierre Titti

Canada

GovernorJohn Manley

Alternate GovernorMarcel Masse*Stephen Millar*Vinita Watson*Susan Whelan*

AdviserTom BuiGrant James CameronSanjeev ChowdhuryMorgan Nicholas ElliottStephen Douglas FreeMichael HorganMarc LavigneClaude LemieuxMariette MailletBruce MontadorJohn OrmondJonathan RothschildMichael ScandiffioJennifer SloanDouglas Williams

Cape Verde

GovernorCarlos Augusto Duarte Burgo

Alternate GovernorVictor A.G. Fidalgo


252

Chad

GovernorMahamat Ali Hassan

Alternate GovernorMahamat Bahradine Oumar

AdviserHassan Adoum BakhitCherif Mahamat senoussi

Chile

GovernorLuis Eduardo Escobar

Alternate GovernorLuis Felipe Jimenez

AdviserJorge Kaufmann

China

GovernorJin Renqing

Alternate GovernorLi YongYuxi Sun*Wu Jinkang*Zhijun Zhang*Zhao Xiaoyu*Zhu Guangyao*Zou Jiayi*

AdviserZhijun ChengZhongyang HuangLi GuanghuiShubin MuXuemin ShaoZhenyi TangZhihua WangWu JianjunJianmin YangYang JinlinShichao YangWeiguo YangYang YingmingMinwen ZhangQuan Zheng

Colombia

GovernorAlberto Carrasquilla

Alternate GovernorSantiago Montenegro TrujilloGustavo A. Gaviria*Carlos Rodriguez Lopez*

Comoros

GovernorYounoussa Imani

Alternate GovernorAbdallah Moindjie Saadi

AdviserSaid Abdillahi

Congo, Democratic Republic of the

GovernorTshishimbi Muamba

Alternate GovernorMatata Ponyo Mapon

AdviserBolaluete MbwebemboSula Mulenga

Congo, Republic of

GovernorRigobert Roger Andely

Alternate GovernorPierre Moussa

AdviserTheodore IkemoM. Kaba-MboualaJean Baptiste OndayeGuillaume Owassa

Costa Rica

GovernorAlberto Dent Zeledon

Alternate GovernorMario Riggioni

Cote d’Ivoire

GovernorSeydou Elimane Diarra

Alternate GovernorBoniface Britto


253

AdviserPatrick AshicDe IsaacGuillaume GnamienGohy Didiane Tra bi

Croatia, Republic of

GovernorMato Crkvenac

Alternate GovernorJosip Kulisic

AdviserVedrana CarevicMarija KolaricIvica Tomic

Cyprus

GovernorMarkos Kyprianou

Alternate GovernorChristos Patsalides

AdviserH.G. AkhniotisKyriacos KakourisLeslie G. Manison

Czech Republic

Alternate GovernorOldrich DedekLenka Loudova*

AdviserPavel FrelichJana Matesova

Denmark

Alternate GovernorCarsten StaurKirsten Rosenvold Geelan*Ole Torpegaard Hansen*

AdviserPernille DueholmFinn JonckMartin Strandgaard

Djibouti

GovernorYacin Elmi Bouh

Alternate GovernorSimon Mibrathu

AdviserLuc-Abdi AdenIbrahim Hamadou HassanAlmis Mohamed Abdillahi

Dominica

GovernorJennifer Nero

Alternate GovernorGarth P. Nicholls

Dominican Republic

GovernorJose Luis Suarez Losada

Alternate GovernorJaime Alvarez*

Ecuador

GovernorMauricio Pozo Crespo

Alternate GovernorDiego Mancheno*

AdviserJuan Manuel Escalante

Egypt, Arab Republic of

GovernorMedhat Hassanein

Alternate GovernorAboulnaga Fayza

AdviserAli Mohamed IssaMangoud Mohamad KhairallaFarouk ShakweerKamel SharifIbrahim Sultan


254

El Salvador

Alternate GovernorLuz Maria Serpas de PortilloEnrique Onate Muyshondt*

Equatorial Guinea

GovernorAntonio Nve Nseng

Alternate GovernorLucas Abaga Nchama*

AdviserCarlos Damian Baca EboroFrancisco Garcia Bernico

Eritrea

GovernorAbraham Kidane

Alternate GovernorMartha Woldeghiorghis TedlaGirmai Abraham*

Estonia#

GovernorTonis Palts

Alternate GovernorRenaldo Mandmets

AdviserPriit TurkMadis Uurike

Ethiopia

GovernorAhmed Sufian

Alternate GovernorAbi Woldemeskel

AdviserMitiku AbdiBerhaun Getaneh AbebeMoges Chemere BelachewAto Leikun BerhanuGizachew Bizuayehu BeyeneBulcha DemeksaNewai GebreabKidane Nikodimos

Fiji

GovernorJone Yavala Kubuabola

Alternate GovernorAisake J. Taito

Finland

GovernorAntti Kalliomaki

Alternate GovernorPasi Hellman*Martti Hetemaki*Pertti Majanen*

AdviserNesrin CanInkeri HirvensaloSatu HuberPekka HukkaPauli KariniemiTarja LaitiainenAri-Pekka LattiMikko PyhalaRisto RekolaKristina Sarjo

France

Alternate GovernorJean-Pierre JouyetPierre Duquesne*Stephane Pallez*Pierre Andre Wiltzer*

AdviserSandrine BoucherValerie BrosPascal CollangeDelphine D’AmarzitJacques de LajugieAlexandre DraznieksLaurent DuriezAmbroise Sixte FayolleBenoit GausseronFrancois GouyetteRobert JongeryckAlain Le royDaniel MaitreRobert MoulieJacques PelletierEmile Robert Perrin


255

Jean PesmeBrice QuesnelAnthony RequinEtienne Rolland-PiegueJean-Paul TrucyClaire WaysandEtienne Wermester

Gabon

GovernorCasimir Oye-Mba

Alternate GovernorChristian Bongo

AdviserDidier Guy MebaleyHamidou Okaba

Gambia, The

GovernorFamara L. Jatta

Alternate GovernorDodou B. Jagne

AdviserMustapha LeighGrahame J. NathanStephen Prior

Georgia

Alternate GovernorTemur Basilia*

Germany

GovernorHeidemarie Wieczorek-Zeul

Alternate GovernorCaio K. Koch-WeserJoerg Asmussen*Eckhard Deutscher*Karsten Hinrichs*Michael Hofmann*

AdviserStephan BetheSiegfried BorggrefeDoris BrauerChristian BuckKarl Conrad Cappell

Franz DickenDetlef Hans DzembritzkiPaul GaraycocheaUwe GehlenWalter E. HermannMarion KneeschOliver KnoerichArne PellensMichael PlessowThilo SarrazinGerhard SennlaubWalter StechelJuergen SteltzerGerhard StratthausJuergen Zattler

Ghana

GovernorYaw Osafo-Maafo

Alternate GovernorAnthony Akoto Osei

AdviserFrank Brako AduErnest Ako-AdjeiFrank Brako AduMahamadu BawumiaHabib Ben MansourSammy Aryee Welbeck

Greece

GovernorNikolaos Christodoulakis

Alternate GovernorVasilis Rapanos

AdviserDimitrios DimakosYannis A. MonogiosSpyros P. PapanicolaouPanagiotis A. PliatsikasParaskevi ProtopapasChristoforos SardelisGeorge Zois

Grenada

GovernorAnthony Boatswain

Alternate GovernorTimothy Antoine


256

Guatemala

GovernorEduardo Humberto Weymann

Fuentes

Alternate GovernorRaul Berrios*

Guinea

GovernorNiankoye Fassou Sagno

Alternate GovernorAlkaly Mohamed Daffe

AdviserBoubacar BahBachir BangouraMohamed Kanfory BangouraMadikaba CamaraAnsoumane CondeFatoumata DiopAly Ibrahima SyllaSekou Traore

Guyana

GovernorSaisnarine Kowlessar

Alternate GovernorClyde Raymond Roopchand

Haiti

GovernorFaubert Gustave

Alternate GovernorKetleen Florestal

Honduras

GovernorArturo Alvarado

Alternate GovernorMaria Elena Mondragon de Villar

Hungary

GovernorCsaba Laszlo

Alternate GovernorIstvan Salgo*

AdviserLaszlo BuzasNoemi FenyovariAdam KirchknopfFerencne Peter Szablyar

Iceland

Alternate GovernorGeir Hilmar HaardeThorsteinn Ingolfsson*

AdviserEgill GislasonAnna HjartardottirHermann Orn IngolfssonJon Erlingur JonassonJorundur Valtysson

India

Alternate GovernorDinesh GuptaAshok Lahiri*B.P. Misra*Chander Mohan Vasudev*

AdviserVellore AnandarajanSandip GhoseNarendra JadhavR.K. KapilAshoke RanaS.K. ReddyAjay SethShakti SinhaY.K. SinhaDhirendra SwarupSudhir Vyas

Indonesia

Alternate GovernorHartadi A. SarwonoFaisal Bafadal*Marwanto*

AdviserMuhammad R. AchmadAvi DwipayanaHadiyantoHerwidayatmoJannes HutagalungBambang Santoso MarsoemNuradi NoeriArsjad Rasjid


257

RosinuTri SuryaMeizar SuyardiAgus Wicaksono

Iran, Islamic Republic of

GovernorThahmaseb Mazaheri-Khorzani

Alternate GovernorMohammad Khazaee Torshizi

AdviserBehrouz AlishiriZohreh BahrehbarMasoud MozayaniMostafa SarlakiShamseddin Vahabi

Ireland

GovernorCharlie McCreevy

Alternate GovernorElizabeth Beckett*Robert Bradshaw*Noel O’Gorman*Brendan Ryan*Michael J. Somers*

AdviserDonal CahalaneAdrian J. KearnsEarnan O’CleirighHannah O’RiordanDermot RyanThomas Whelan

Israel

GovernorDavid Klein

Alternate GovernorEldad Lador-Fresher

AdviserOfir AkunisUri GinosarAvner HaleviHagit MualemAtalia RosenbaumYaacov Rosh

Ayelet SaraganiYair Avraham SheferOlga SullaBarry TopfEliezer Modi Zandberg

Italy

GovernorAntonio Fazio

Alternate GovernorGiorgio Leccesi*

AdviserCarlo BaldocciFabrizio BefaniPierluigi CioccaLuigi CuccaWalter FanelliFabio FranceschiniGiorgio GomelPatrizia GuidarelliIsabella ImperatoAlessandro LegrottaglieAndrea ManzittiGiuseppe MarescaMaria Luisa MattiuzziMarco MilaneseNicola MinasiVirna MiseriniCarlo MonticelliDomenico NardelliFranco PassacantandoDomenico PedataVincenzo PontolilloFabrizio RavoniRoberto RinaldiMarina SabatiniArrigo SadunRoberto SaltaAlberto Santa MariaPaola SfasciottiDomenico SiniscalcoRenato SorrentinoClaudio SpinediAldo Volini

Jamaica#

Alternate GovernorWesley George HughesShirley Tyndall*


258

AdviserLocksley S. SmithSharon Weber

Japan

Alternate GovernorToshihiko FukuiAkira Ariyoshi*Yuzo Harada*Eiji Hirano*Kiyoto Ido*Kiyoshi Kodera*Kinichi Komano*Zembei Mizoguchi*Naoyuki Shinohara*Fumiaki Takahashi*Rintaro Tamaki*Hajime Tsujimoto*Ken Yagi*Motohide Yoshikawa*

AdviserKen BabaKoichi HasegawaMakoto HosomiMasakazu IchikawaNobuyuki IchikawaNaoko IshiiHironori ItoMikio KajikawaHironori KawauchiTomonori KikuchiShigeki KimuraMichio KitaharaShuji KobayakawaTomoko KubotaShigeki KushidaHisashi MichigamiKiyomi MiyagawaToshihisa MiyamotoToshiyuki MiyoshiKazuhiro MorimotoIsaya MutoShinsuke NakaHiroaki NakagawaToru NakazawaKo NaraiMitsuru NomuraIchiro OishiYuzuru OjimaHideaki OnoToshio Oya

Masaki SakamotoShigeru ShimizuFumihiro YagawaYasuaki Yoneyama

Jordan

GovernorBassem I. Awadallah

Alternate GovernorTayseer Radwan Al-Smadi

AdviserSaher Akroush

Kazakhstan

GovernorAlexander Sergeyevich Pavlov

Alternate GovernorKayrat N. Kelimbetov

AdviserTalgat Shaldanbay

Kenya

GovernorDavid Mwiraria

Alternate GovernorJoseph Mbui Magari

AdviserDonald K. KiberaCatherine M. KimuraJackson KinyanjuiSadia SalimKen Vitisia

Kiribati

GovernorPeter Tong

Alternate GovernorNorma Yeeting

Republic of Korea

GovernorTae-Shin Kwon

Alternate GovernorJae-Ouk Lee


259

AdviserYeon-lan ChaeDae Shik ChinDong-Soo ChinSoung-Ik ChoJong-Ho ChoiJoong-Kyung ChoiKwang Sok ChoiKyu-Chul ChoiTae Young ChoiByoung-Je ChunJae-Soo ChunKwang-Won ChungSung-Soo EunByung Wha JangSun-Yong KangByung-Il KimGwang-Soo KimGyoon-Ho KimHong-Guk KimSeung-Kyu KimSoo Hoi KimSung Jin KimWon-Dae KimEog-Weon LeeHyun-Cheol LeeJae-Sun LeeKyung-Kun LeeKyung-Yul LeeMyeng-Jin Mary LeeSinae LeeSun-In LeeTae-Sik LeeJi-Sung MoonJoon-Kyu ParkNam-Sun ParkYeon Jeong SongGi Cheol YangSung-Man Youm

Kuwait

GovernorMahmoud Al-Nouri

Alternate GovernorBader Meshari Al-Humaidhi

AdviserAbdulrahman Al-HashimEid Al-RasheediSami Husain AlanbaeeYousef Al-AwadiHamad Al-Jutaili

Aiman Al-MahannaAhmed Al MesferBarrak Al-MubarakiFaisal Al NasrallaKhalid Sulaiman Al-RuwaihSalem Abdullah Al-Ahmed

Al-SabahSaleh Y. Al-SagoubiMustafa Jassim Al-ShamaliFawzi Hamad Al-SultanHesham Ibrahim Al-WaqayanHassan Al ZamnAhmad Mohammed Abdulrehman

Bastaki

Kyrgyz Republic

GovernorBolot Abildaev

Alternate GovernorAydar Akaev*

AdviserOrunbek K. Shamkanov

Lao People’s Democratic Republic

GovernorSomdy Douangdy

Alternate GovernorThipphakone Chanthavongsa

Latvia

GovernorValdis Dombrovskis

Alternate GovernorAndris Liepins*

AdviserArnis Lagzdins

Lebanon

GovernorFuad A.B. Siniora

Alternate GovernorMarwan Hemadeh

AdviserJihad AzourSamih BabirHassan Berro


260

Alain BifaniWafaa CharafeddineAntoine DibFakoury EdwardoKhaled El KassarGeorges El-KhouryRhea FayadJoey Raymoud GhalebIssam Mounir HarbJamal Abdel Rahim ItaniAdnan KassarTarek KombarjiFadi Ali MakkiRola Saleh RizkNasser SaidiSami SfeirZina SinioraJoseph M. TorbeyRaouf Zaki

Lesotho

GovernorMoeketsi Majoro

Alternate GovernorMoliehi Matabane

AdviserAnna Mathias Msutze

Liberia

Alternate GovernorHarry Augustus Greaves

Libya

GovernorAgali Abdussalam Breni

Alternate GovernorAli Ramadan Shnebsh

AdviserAbdusllam KamesSaleh Ahmed Keshlaf

Lithuania#

GovernorDalia Grybauskaite

Alternate GovernorArvydas Kregzde

AdviserRima Kaziliuniene

Luxembourg

GovernorLuc Frieden

Alternate GovernorJean Guill

AdviserGeorges A. Heinen

Macedonia, former Yugoslav Republic of

GovernorPetar Gosev

Alternate GovernorDimko Kokaroski

AdviserVanco KargovLjupka Mindoseva

Madagascar

GovernorZaza Manitranja Ramandimbiarison

Alternate GovernorHenri Bernard Razakariasa

AdviserMaxence Louis Randriantoetra

Malawi

GovernorFriday Jumbe

Alternate GovernorBingu Wa Mutharika

AdviserWilson Toninga BandaMilton KutenguleHelen LiombaTed Thokozani SitimawinaAlfred A. Upindi

Malaysia

GovernorJamaludin Mohd Jarjis

Alternate GovernorSiti Hadzar Mohd. Ismail*


261

AdviserMohd. Mustafa Abdul azizAbdul Mutalib AliasMohd Hassan AhmadZarinah AnwarMohd Anuardi HajaniIbrahim Mahaludin PutehKamel MohamadAinon MohdNik Affendy Nik abdul rashidNursiah Arshad Nursiah Bt ArshadRaja Zaharaton Raja Zainal AbidinAbdul Mubin RazaliSee Ah SingTengku Zafrul Tengku Aziz

Maldives

Alternate GovernorAdam Maniku

Mali

GovernorMarimantia Diarra

Alternate GovernorAboubacar Alhousseyni Toure

AdviserAbdoulaye DaffeRoger B. JantioAssitan KouyateLassana Mouke SackoIdrissa Traore

Malta<>#

GovernorAnthony Abela

Alternate GovernorAnthony Farrugia*

Marshall Islands

GovernorSmith Michael

Mauritania

GovernorAbdallah Ould Cheikh-Sidia

Alternate GovernorMohamed Ould El Abed

AdviserAbba Ould Ahmed TolbaAbdel Kader Ould AhmedMohamed El Heyba Ould

LemrabottIkabrou Ould MohamedCheikh Sid Ahmed Ould BabamineMohamed Abdelrahman Ould Hadi

Ould SeyadMahfoudh Ould Mohamed Ali

Mauritius

GovernorKhushhal Chand Khushiram

Alternate GovernorAyub Hussein Nakhuda

AdviserHemraz Oopuddhye JankeeGuy Wong SoYouk-Siane Patrick Yip Wang Wing

Mexico

GovernorFrancisco Gil Diaz

Alternate GovernorAndres ConesaFrancisco J.J. Castro y Ortiz*Ricardo Ochoa Rodriguez*

AdviserAntonio Castano

Micronesia, Federated States of

GovernorSabino Asor

Alternate GovernorJames Naich

Moldova

GovernorZinaida Grecianii

Alternate GovernorDumitru Ursu


262

Adviser

Rutger Palmstierna

Mongolia

GovernorChultem Ulaan

Alternate GovernorTserendagva Odongua

AdviserKhulan BuyankhishigBatsukh Enkhkhuyag

Morocco

GovernorFathallah Oualalou

Alternate GovernorSabah Benchekroun*Zouhair Chorfi*

AdviserMustapha BakkouryEl Hadi ChaibainouMohamed El aljMohamed El MerghadiMustapha FarisAli LamraniBenyoussef SaboniAli Tricha

Mozambique

GovernorAdriano Afonso Maleiane

Alternate G overnorAntonio Fernando Laice*

AdviserBamze SebastaiaoMusa Usman

Myanmar

GovernorHla Tun

Alternate GovernorThan Nwe

AdviserSoe LinAung Myo Win

Namibia#

GovernorImmanuel Ngatjizeko

Alternate GovernorGodfrey Gaoseb

AdviserBertha KazauanaAnna MbunduCecilia NdishishiEricah Brave ShafudahSven Thieme

Nepal

GovernorPrakash Chandra Lohani

Alternate GovernorBhanu Prasad Acharya

AdviserUttam B. Pun

Netherlands, The

GovernorGerrit Zalm

Alternate GovernorAgnes van ArdenneAd Melkert*

AdviserCarola B. BallerJacobus Hubertus ChristiaanseMartijn DademaDavid De WaalRon KellerRochus PronkMark TimmermansJack Twiss Quarles van UffordCorina Van Der LaanJacob Waslander

New Zealand

GovernorJohn Whitehead

Alternate GovernorAndrew Blazey


263

AdviserPeter William AdamsThomas John AustinAngela Jane BarnesMatthew DalzellPatricia Mary HerbertJames HowellSam LewisMichael WalshGavin Young

Nicaragua

GovernorEduardo Montealegre Rivas

Alternate GovernorMario Alonso Icabalceta

AdviserJorge Wong-Valle

Niger

GovernorAli Badjo Gamatie

Alternate GovernorAli M. Lamine Zene

AdviserChayabou AbdouAlassane Kone

Nigeria

GovernorNgozi N. Okonjo-Iweala

Alternate GovernorHaruna Usman SanusiAkinlose Sylvester Arikawe*Stephens Osagiede Oronsaye*Dave Oladapo Salako*

AdviserMercy Uzo AgbamucheFawzia Itopa AhmedModibbo Usman A. AhmedUsa IgwesiChristopher Osiomha ItsedeOby IzekwesiliAhmadu Adamu Mu’azu

Abdulkareem Olabanji OlaoyeMohamed Lawal SaniMuhammad Yusufu

Norway

GovernorHilde Frafjord Johnson

Alternate GovernorCecilie Landsverk*Trond Folke Lindberg*

AdviserUlf ChristiansenSvein Age DaleAlf FriisoeRobert HovdePer Egil SelvaagTom Tjomsland

Oman

GovernorAhmed Bin Abdulnabi Macki

Alternate GovernorMohammed Jawad SulaimanSabir Al-Harbi*Al-Fadhel Mohammed Al-Harthy*Mohammed Al-Mahrouki*

AdviserMohammed Ali Mohammed Al

HarthyWarith bin Mubarak Al-Kharusi

Pakistan

GovernorShaukat Aziz

Alternate GovernorNawid Ahsan*

AdviserTanwir Ali AghaAmanullah LarikMushtaq Malik

Palau

GovernorCasmir Remengesau


264

Alternate GovernorRuth Wong

Panama

GovernorNorberto Delgado Duran

Alternate GovernorAracelly MendezEida Gabriela Saiz De Eleta*

AdviserPeter Allen

Papua New Guinea

GovernorBart Philemon

Alternate GovernorKoiari Tarata

AdviserKostas ConstantinouAnthony Yauieb

Paraguay

GovernorJose Ernesto Buttner Limprich

Alternate GovernorFrancisco Ogura

AdviserVictor I. Vazquez Aranda

Peru

GovernorJaime Quijandria Salmon

Alternate GovernorEdgar Zamalloa*

AdviserIvan Rivera

Philippines

GovernorJose Isidro N. Camacho

Alternate GovernorAmando M. Tetangco Jr.*

AdviserGil S. BeltranGeneroso CalongeJaime CamposanoMaria DuarteJesus DurezaEduardo ErmitaWilliam B. GoCorazon P. GuidoteJesus JacintoMarita JimenezJose Carlos LacsonAntonio H. OzaetaRoberto PanlilioMelito S. SalazarCesar E.A. Virata

Poland

Alternate GovernorPawel SameckiKrzysztof Majczuk*

AdviserMiroslaw AdamczykJaroslaw BeldowskiIgor ChalupecJakub Karnowski

Portugal

GovernorManuela Ferreira Leite

Alternate GovernorFrancisco Esteves de CarvalhoMario Lobo*Nuno Mota Pinto*

AdviserJose Manuel FariaEduardo Silva FarinhaNuno Maria Mariano de Carvalho

JonetMaria Lucia LeitaoVasco Manuel da Silva Pereira

Qatar<>#

GovernorYousef Hussain Kamal


265

Alternate GovernorHussain Al-Abdulla

AdviserAbdurahman Dashti

Romania#

GovernorMihai Nicolae Tanasescu

Alternate GovernorCristian Popa*

AdviserStefan Petrescu

Russian Federation

Alternate GovernorSergei Ignatiev*Andrei N. Illarionov*Sergei Kolotukhin*Alexey G. Kvasov*Aleksei Ulyukaev*Oleg Vyugin*

AdviserVictor BolyasnikovAndrei BugrovIgor FinogenovSvetlana GaneyevaIouri IsaevNadezhda IvanovaStanislav KatashAndrey I. KhalevinskyAndrei KondakovAndrei KostinBoris M. LvinEugene MiagkovOleg MuradyanKonstantin PanovAleksander PavlovTatiana ProskuryakovaAleksandr ShamrinAndrei ShinayevVladimir StolyarenkoSergei StorchakAnton TolstikovGennady YezhovIrina Zakharenko

Rwanda

GovernorDonald Kaberuka

Alternate GovernorJean Jacques Nyirubutama

AdviserAlfred G. Kalisa

St. Kitts and Nevis

GovernorDenzil Douglas

Alternate GovernorVance Amory*

AdviserLaurie LawrenceSunil Sutickshun Parray

St. Lucia

Alternate GovernorTrevor Brathwaite

St. Vincent and the Grenadines<>

Alternate GovernorLaura Anthony-Browne

Samoa

GovernorHinauri Petana

Alternate GovernorTekauita Lusia Sefo

San Marino<>#

GovernorMaurizio Rattini

Alternate GovernorPietro Giacomini*

AdviserLuca PapiAntonio Valentini

Sao Tome and Principe<>

GovernorEugenio Lourenco Soares

Alternate GovernorMaria dos Santos Tebus Torres

AdviserAmerico D’Oliveira RamosJuan Carlos Vilanova Pardo


266

Saudi Arabia

GovernorIbrahim A. Al-Assaf

Alternate GovernorHamad Al-BazaiYahya Alyahya*

AdviserMazen Abdul MajeedAbdullah Abu SamhAbdulrahman AddasTaha Al KuwaizSaid Al ShaikhAhmed Al-KholifeyRashed Saad Al-rashedSalman Bin Abdulrahman

Al-SudairySaleh Ali AlawajiAbdallah S. AlazzazAhmed Al-BalawieYousef I. Al-BassamIrfan AleemBasel AlgadhibAbdulrahman Al-HamidyAbdullah I. Al-HudaithiAbdullah Al-HugailTeymour Abdulla AlirezaAbdullatif Al-JabrAlaa Al-JabriMedlej Al-MedlejMishari Al-MishariAbdulrahman Mohammed

AlmofadhiIbrahim M. Al-MoflehSaad Ibrahim AlmojelKhalid Abdullah Al-MolhemTalal Al NaseriMusaed AlnemerYousef A. AlohaliSaeed Al-QahtaniAbdullah Sulaiman Al-RajhiFahd Abdullah Al-RajhiAbdulaziz Rashed Al-RashedAbdul Monem Rashed Al-RashedRashed Abdulaziz Al-RashedSaud Al-SalehAhmad Al-SariAbdullah Al-ShammariMohammad Al-ShehriIbrahim Al-TouqAbdulrahman Al-TuwaijriAbdulaziz Al-Wahaib

Khalid Al-YahyaSaud Al-YemeniSami Al-YousefAbdullah bin Salem BahamdanAbdullah Bin Faisal Bin TurkiSultan Bin Salman Al-SaudJitendra G. BorpujariSayed Ahmed DiaaSaid H. HashimRichard R. HerbertTariq JavedMuhammad Saleh JokhdarAbdullah Saleh KamelSaleh A. KamelTerence MarshallMelhem F. MelhemAbdulaziz A. O’HaliNemeh Elias SabbaghAbdulhadi Ali ShayifNahed TaherBertrand Viriot

Senegal

GovernorAbdoulaye Diop

Alternate GovernorMamadou Faye*

AdviserJean-Marie CoulbarySogue DiarissoAdama DieyeAmadou KaneDiagna N’DiayeSeyni Ndiaye

Serbia and Montenegro

GovernorMiroslav Ivanisevic

Alternate GovernorBozidar Djelic

AdviserTanja KrivokapicDragana Ostojic

Seychelles#

GovernorJeremie Bonnelame

Alternate GovernorAlain Butler-Payette


267

AdviserVivianne Simone Fock-TaveRoger ToussaintMukesh Valabhji

Sierra Leone

GovernorJoseph Bandabla Dauda

Alternate GovernorSamura Kamara

AdviserAbdulai KakayAbdul Rahman Turay

Singapore

GovernorLim Hng Kiang

Alternate GovernorLim Siong Guan

AdviserGoh Chye BoonPuar Hai KuanHarwindar Singh

Slovak Republic

GovernorIvan Miklos

Alternate GovernorElena Kohutikova

Slovenia

GovernorDusan Mramor

Alternate GovernorIrena SodinSibil Svilan*

AdviserStanislava Zadravec-Caprirolo

Solomon Islands

GovernorFrancis John Zama

Alternate GovernorShadrach Fanega

South Africa

GovernorTrevor Andrew Manuel

Alternate GovernorM.B.M. Mpahlwa

AdviserDanel Janse Van RensburgLesetja KganyagoMoegamat Shahid KhanChristopher LoewaldDikgang MoopeloaThoraya PandyShirley Margaret Alice RobinsonLogan Wort

Spain

GovernorRodrigo de Rato Figaredo

Alternate GovernorMaria Jesus Fernandez*Angel Martin-Acebes*Angel Torres*

Sri Lanka

GovernorKairshasp Nariman Choksy

Alternate GovernorCharitha RatwatteRajapakse A. Jayatissa*Faiz Mohideen*

Sudan

GovernorEl Zubair Ahmed El Hassan

Alternate GovernorAbda Y. El Mahdi

AdviserMohyeddine Salim AhmedAbdalla M. BabdoulEl Sheikh Mohamed ElmakSaifelddin Atta Fadl ElseedBader Eldeen Hussein JubrallaAlobeid A. MurawihNurelhuda Fathalaleen Seed AhmedAhmed M. Shawir


268

Suriname<>#

GovernorHumphrey S. Hildenberg

Alternate GovernorStanley B. Ramsaran

Swaziland

GovernorGuduza Dlamini

Alternate GovernorMusa D. Fakudze

AdviserKhangeziwe Glory MabuzaLonkhululeko Sibandze

Sweden

GovernorGunnar Lund

AdviserErik EldhagenStefan EmbladBjorn GillsaterLars Erik GrundellRuth JacobyBo JerlstromCaroline LeijonhufvudPer Ola MattssonArne StromAnette Tornqvist

Switzerland

GovernorKaspar Villiger

Alternate GovernorOscar KnappSerge Chappatte*Denis Knobel*Pietro Veglio*

AdviserMatthias AndereggTeresa ChejlavaRaymund A. FurrerRita Haemmerli-WeschkeJean-Claude HagmannWafa Yahia T. HijjawiDarius Kurek

Peter VoglerNiklaus Zingg

Syrian Arab Republic

GovernorGhassan El-Rifai

Alternate GovernorMohamad Bittar

AdviserHussein M. AmachRima Kadri

Tajikistan

GovernorSafarali Najmuddinov

Alternate GovernorNegmatdzhon KhikmatullayevichBuriyev

AdviserDjamoliddin Nuraliev

Tanzania

GovernorAbdallah Omar Kigoda

Alternate GovernorGray S. Mgonja

AdviserEnos Steven BukukuJerome J. BurettaFatma Aboud JumbePeter Lwali KadeshaNjelu E. M. KasakaHussein S. KhatibRamadhani KhijjahJohn Benti KimaroLediana M. Mng’ong’oHerbert E. MrangoAthunami MwinyigohaSuleiman NyangaBlandina NyoniJ.B. Raphael

Thailand

GovernorVarathep Ratanakorn


269

Alternate GovernorSomchainuk EngtrakulNibhat Bhukkanasut*Sommai Phasee*Wisudhi Srisuphan*Vijit Supinit*

AdviserMongkon AmpornpisitApichit AssathawasiRapee AsumpinpongLuxmon AttapichNophadol BhandhugraviRoongrueng BhidayasiriSutha ChansaengNadhavudh DhamasiriDanand JaovisidhaSuchai JaovisidhaTodhanakasem KittiyaWarotai KosolpisitkulSakun LambasaraSawangchit LaohathaiPakorn Malakul Na AyudhyaHassan MasohCharnchai MusignisarkornViroj NualkhairChakkrit ParapuntakulChakramon PhasukavanichSomchat PhongmaneePaitoon PongkesornPannee SathavarodomPongsathorn SiriyodhinChularat SuteethornSirote SwasdipanichAnothai TechamontrikulKirutcha TintamusikSuwit UdomsabPorametee VimolsiriPerames VudthitornetiraksAnchana Wongsawang

Timor-Leste<>

GovernorMari Bin Amude Alkatiri

Alternate GovernorJose Manuel Guterres

AdviserConstancio Pinto

Togo

GovernorM’ba Bilor Legzim

Alternate GovernorMewunesso Baliki PiniCharles Konan Banny*

AdviserZakari Darou-SalimAyewanou Agetoho Gbeasor

Tonga

GovernorSiosiua T.T. ‘Utoikamanu

Alternate GovernorHenry William Cocker*

Adviser‘Aisake V. Eke

Trinidad and Tobago

GovernorConrad Enill

Alternate GovernorLeroy Mayers

AdviserJoseph HowardAnthony John JosephCraig Leon

Tunisia

GovernorMohamed Nouri Jouini

Alternate GovernorAbdelhamid Triki

AdviserHabib Ben HarizKamel Ben RejebSamir Chebil

Turkey

GovernorIbrahim H. Canakci

Alternate GovernorMelih Nemli*

AdviserTufan AkmanOsman AriogluBirol AydemirErdem Basci


270

Emin DedeogluHalit ErtegrulInci GezgucHasan GulYuksel KaracaTeoman KermanAhmet KesikMetin KilciMehmet KilicHaci Ahmet KilicogluHalit OcalS. Elvan OngunMustafa RumeliGulbin SahinbeyogluMustafa Ertan TanriyakulAhmet TiktikErcan TurkanZeynep UlasKemal Unakitan

Turkmenistan#

GovernorGurbanberdi Orazov

AdviserDovran M. Muratnazarov

Uganda

GovernorGerald M. Ssendaula

Alternate GovernorC.M. Kassami

AdviserSyda Namirembe BbumbaKeith MuhakaniziPolycarp MusinguziFrancis TumuheirweJuma Y.K. Walusimbi

Ukraine#

GovernorValeriy Khoroshkovskiy

Alternate GovernorSerhiy Manokha

AdviserRustam RustamovTamara SolyanykIgor TymofeyevMykhailo Yurlov

United Arab Emirates

GovernorHamdan bin Rashid Al-Maktoum

Alternate GovernorMohammed Khalfan Bin Khirbash

AdviserAbdulla Yousef Aal-AbdullaMohammad Nasr AbdeenAbdul Rahman A Abdul MalikMusabeh Mohd Al SuwaidiSalem Jasem AlbakrKhalid Ali Al-BustaniFadhel Saeed Al DarmakiAmjad Yusri Al DwaikButi Khalifa Al FalasiRashid Mohammed Al FandiAbdulla Jama K. AlgaiziAbdul Aziz Al GhurairSaeed Abdulla Saeed Al HamizSalim Al-HammadiFahed Ahmed Al HosaniAnis Al-JallafJuma Al MajidKhalifa Nasser Al-MansooriMohammed Salim Al MarriKhaled Abdulla Al MassMohamed Eid Al MeraikhiJamal Ebrahim A. Al MlutawwaQamber Ali Al MullaSheikh Ahmad Z. Al NehayanSaeed Khalfan Al-RomaithiSultan Rashed Ebrahim Saif

Al-SakebJasem AlshamsiSaif H. Al-ShamsiAmal Abdulla AlsharhanSaif Ali Al ShehhiMohamed A.S. Al SulaichNasser Al-SuwaidiZakarea A. Al SuwaidiSalem Ahmed S.A. Al ZaabiSalem Mohamed BallamaAhmed Saeed S. Bin BraikR. Douglas DowieReda Musallam El SayedYacoub Y. HassanNariman A. Kamber Al-AwadhiEssa Abdulfattah KazimAbdulqadir Hamid NasrAbdul Hamid SaeedAbdulshakoor TahlakMichael H. Tomalin


271

United Kingdom

GovernorValerie Amos

Alternate GovernorGordon BrownEd Balls*Martin Arnulf Brooke*Suma Chakrabarti*Jon Cunliffe*Peter Grant*Gus O’Donnell*Stephen John Pickford*Tom Scholar*Rosemary Stevenson*

AdviserMark BowmanSimon CollisLaura ConradJames DroopAlex EvansClaire EvansAlistair FernieNicholas B. JoiceyBen KelmansonRoman LaxtonRichard MakepeaceMoazzam MalikDamian McbrideBen MellorSimon MoyseHester NormanJonathan OckendenHeather ReynoldsPeter D. RodgersShriti VaderaBeverly WarmingtonLindsey WhyteJohn YarrowAlex Younger

United States

GovernorJohn W. Snow

Alternate GovernorAlan P. LarsonCarole Brookins*Todd W. Crawford*Charles Greenwood*

Robert B. Holland*David P. Loevinger*Clay Lowery*Randal Quarles*William Schuerch*Mark Sobel*John Taylor*

AdviserTim AdamsRichard AlbrightKen BorgheseMichael CarverWendy ChamberlinTerrence J. CheckiThomas A. ConnorsAnna CorfieldBrian B. CoxJason L. DavisAbby DemopulosMeg DonovanKarl EikenberryRichard GreenePatricia HaslachJason HowkOliver JohnKaren H. JohnsonDirk JoldersmaMichael KaplanAdnan KifayatCharles Mallory IVKaren MathiasenMatthew McLaughlinSean MilesCarter MillsWilliam C. MurdenMatthew NicholasRob NicholsDavid NorquistTimothy O’BrienFarah PandithSara PaulsonRobin L. RaphelRobin Ruth RitterhoffJohn RosenbaumNathan SheetsEmmy SimmonsRamin TolouiJoanna VeltriMarcelle WahbaAtticus WellerMary A. WiledenKevin Wilkerson


272

Kirsten WivelJesus ZapataJuan Zarate

Uruguay#

GovernorIsaac Alfie

Alternate GovernorHoracio Bafico*

AdviserDaniel G. CairoCarlos Steneri

Uzbekistan

GovernorRustam S. Azimov

Alternate GovernorUlugbek Rozukulov*

Vanuatu

GovernorSela Molisa

Alternate GovernorJohn Path

Venezuela, Republica Bolivariana de#

GovernorJorge Giordani

Alternate GovernorTobias Nobrega Suarez

AdviserAli AguileraAlejandro DopazoPer Kurowski

Vietnam

GovernorNguyen Quang Huy

Alternate GovernorDang Anh Mai

AdviserLe Dac CuTran Ngoc MinhNguyen Duc Thai HanNguyen Hoang LongNguyen Thi Hong ThuyPham Minh TuDinh True PhanTran Dinh DinhTrinh Cong ThangChi Mai Vu

Yemen, Republic of

GovernorAhmed Mohammed Sofan

Alternate GovernorMohammed Al-Sabbry

AdviserMutahar Al-AbbasiAbdulwahab Al-HajjriOmar Salim BazaraGalal Mohamed MoulaHussain Ali OtaifaAhmed Saeed

Zambia

GovernorN’gandu Peter Magande

Alternate GovernorSitumbeko Musokotwane

AdviserMoses BandaSiforiano Sangulukani BandaPatrick Chewe MulengaRonald Simwinga

Zimbabwe

GovernorHerbert M. Murerwa

Alternate GovernorNicholas Ncube

AdviserCharles ChikauraZvinechimwe Churu


273

Afghanistan

GovernorAshraf Ghani

Alternate GovernorAbdul Rahimy

Albania

GovernorShkelqim Cani

Alternate GovernorFatos Ibrahimi

Algeria

GovernorAbdellatif Benachenhou

Alternate GovernorAbdelhak Bedjaoui

Angola

GovernorAna Dias Lourenco

Alternate GovernorJob Graca

Argentina

GovernorAlfonso de Prat-Gay

Alternate GovernorOscar Tangelson

Armenia

GovernorVahram Nercissiantz

Australia

GovernorPeter Costello

Austria

Alternate GovernorPaul Kutos*Klaus Oehler*

Azerbaijan

GovernorAftandil Babayev

Alternate GovernorOktay Ali Oglu Hagverdiev

Bahamas, The

GovernorJames H. Smith

Alternate GovernorRuth R. Millar

Bahrain

GovernorAbdulla Hassan Saif

Alternate GovernorZakaria Ahmed Hejres

Bangladesh

GovernorM. Saifur Rahman

Alternate GovernorAkbar Ali Khan*

Barbados

GovernorTyrone Emanuel Barker

Alternate GovernorGrantley W. Smith

Belarus

GovernorAndrei V. Kobyakov

ACCREDITED MEMBERS OF DELEGATIONS (MIGA)AT THE 2003 ANNUAL MEETINGS

* Temporary

274

Alternate GovernorValery V. Tsepkalo*

Belgium

GovernorDidier Reynders

Alternate GovernorJean-Pierre Arnoldi*

Belize

GovernorSaid W. Musa

Alternate GovernorHugh McSweaney

Benin

GovernorBruno Amoussou

Alternate GovernorFatiou Akplogan

Bolivia

GovernorJavier Comboni Salinas

Alternate GovernorRoberto Camacho

Bosnia and Herzegovina

GovernorAdnan Terzic

Botswana

GovernorBaledzi Gaolathe

Alternate GovernorSerwalo S.G. Tumelo

Brazil

GovernorAntonio Palocci

Alternate GovernorHenrique de Campos MeirellesAmaury Bier*Flavio Sapha*

Bulgaria

GovernorMilen Veltchev

Alternate GovernorLydia Shouleva*

Burkina Faso

GovernorHamade Ouedraogo

Alternate GovernorEtienne Yameogo

Burundi

GovernorAthanase Gahungu

Alternate GovernorDieudonne Nintunze

Cambodia

GovernorVissoth Vongsey

Alternate GovernorSokmuny Thao

Cameroon

GovernorMartin Okouda

Alternate GovernorDaniel Njankouo Lamere

Canada

GovernorJohn Manley

Alternate GovernorMarcel Masse*Stephen Millar*Vinita Watson*Susan Whelan*

Cape Verde

GovernorCarlos Augusto Duarte Burgo

Alternate GovernorVictor A.G. Fidalgo

* Temporary

275

Chad

GovernorMahamat Ali Hassan

Alternate GovernorMahamat Bahradine Oumar

Chile

GovernorLuis Eduardo Escobar

China

GovernorJin Renqing

Alternate GovernorLi YongYuxi Sun*Wu Jinkang*Zhijun Zhang*Zhao Xiaoyu*Zhu Guangyao*Zou Jiayi*

Colombia

GovernorAlberto Carrasquilla

Alternate GovernorSantiago Montenegro Trujillo

Congo, Democratic Republic of the

GovernorModeste Mutombo Kyamakosa

Congo, Republic of

GovernorRigobert Roger Andely

Alternate GovernorPierre Moussa

Costa Rica

GovernorAlberto Dent Zeledon

Alternate GovernorFrancisco de Paula Gutierrez

Cote d’Ivoire

GovernorSeydou Elimane Diarra

Alternate GovernorBoniface Britto

Croatia

Alternate GovernorJosip Kulisic

Cyprus

GovernorMarkos Kyprianou

Alternate GovernorChristos Patsalides

Czech Republic

Alternate GovernorOldrich Dedek

Denmark

Alternate GovernorCarsten StaurKirsten Rosenvold Geelan*Ole Torpegaard Hansen*

Dominica

GovernorJennifer Nero

Alternate GovernorGarth P. Nicholls

Dominican Republic

GovernorJose Lois Malkun

Ecuador

GovernorMauricio Pozo Crespo

Egypt, Arab Republic of

GovernorMedhat Hassanein

* Temporary

276

Alternate GovernorAboulnaga Fayza

El Salvador

Alternate GovernorLuz Maria Serpas de Portillo

Equatorial Guinea

GovernorAntonio Nve Nseng

Eritrea

Alternate GovernorMartha Woldeghiorghis Tedla

Estonia

GovernorTonis Palts

Alternate GovernorRenaldo Mandmets

Ethiopia

GovernorAhmed Sufian

Alternate GovernorAbi Woldemeskel

Fiji

GovernorJone Yavala Kubuabola

Finland

GovernorAntti Kalliomaki

Alternate GovernorPeter NybergMartti Hetemaki*

France

Alternate GovernorJean-Pierre JouyetPierre Duquesne*Stephane Pallez*

Gabon

GovernorCasimir Oye-Mba

Alternate GovernorChristian Bongo

Gambia, The

GovernorFamara L. Jatta

Alternate GovernorDodou B. Jagne

Georgia

Alternate GovernorTemur Basilia*

Germany

GovernorHeidemarie Wieczorek-Zeul

Alternate GovernorCaio K. Koch-WeserJoerg Asmussen*Eckhard Deutscher*Karsten Hinrichs*Michael Hofmann*

Ghana

GovernorYaw Osafo-Maafo

Greece

GovernorNikolaos Christodoulakis

Alternate GovernorVasilis Rapanos

Grenada

GovernorAnthony Boatswain

Alternate GovernorTimothy Antoine

* Temporary

277

Guatemala

Alternate GovernorEduardo Humberto Weymann

Fuentes

Guinea

GovernorNiankoye Fassou Sagno

Alternate GovernorAlkaly Mohamed Daffe

Guyana

GovernorSaisnarine Kowlessar

Haiti

GovernorFaubert Gustave

Alternate GovernorKetleen Florestal

Honduras

GovernorArturo Alvarado

Alternate GovernorMaria Elena Mondragon de Villar

Hungary

Alternate GovernorIstvan Salgo*

Iceland

Alternate GovernorGeir Hilmar Haarde

India

Alternate GovernorDinesh GuptaRanjit Bannerji*Ashok Lahiri*B.P. Misra*Chander Mohan Vasudev*

Indonesia

GovernorBoediono

Alternate GovernorBurhanuddin Abdullah

Ireland

GovernorCharlie McCreevy

Alternate GovernorElizabeth Beckett*Robert Bradshaw*Noel O’Gorman*Brendan Ryan*

Israel

GovernorDavid Klein

Italy

GovernorAntonio Fazio

Jamaica

GovernorOmar Lloyd Davies

Alternate GovernorWesley George HughesShirley Tyndall*

Japan

Alternate GovernorToshihiko FukuiAkira Ariyoshi*Yuzo Harada*Kiyoto Ido*Kiyoshi Kodera*Kinichi Komano*Masafumi Kuroki*Zembei Mizoguchi*Fumiaki Takahashi*Hajime Tsujimoto*Motohide Yoshikawa*

* Temporary

278

Jordan

GovernorBassem I. Awadallah

Alternate GovernorTayseer Radwan Al-Smadi

Kazakhstan

GovernorAlexander Sergeyevich Pavlov

Alternate GovernorKayrat N. Kelimbetov

Kenya

GovernorMaurice John Pette Kanga

Alternate GovernorStanley Ngaine

Korea, Republic of

GovernorTae-Shin Kwon

Alternate GovernorJae-Ouk Lee

Kuwait

GovernorMahmoud Al-Nouri

Alternate GovernorSaleh Mubarak Al-Falah

Kyrgyz Republic

GovernorBolot Abildaev

Alternate GovernorKubat Abduldaevich Kanimetov

Lao People’s Democratic Republic

GovernorSomdy Douangdy

Alternate GovernorThipphakone Chanthavongsa

Latvia

GovernorValdis Dombrovskis

Alternate GovernorAndris Liepins*

Lebanon

GovernorMarwan Hemadeh

Alternate GovernorFuad A.B. Siniora

Lesotho

Alternate GovernorMoliehi Matabane

Libya

GovernorAgali Abdussalam Breni

Alternate GovernorAli Ramadan Shnebsh

Lithuania

GovernorDalia Grybauskaite

Alternate GovernorArvydas Kregzde

Luxembourg

GovernorLuc Frieden

Alternate GovernorJean Guill

Macedonia, former Yugoslav Republic of

GovernorPetar Gosev

Alternate GovernorDimko Kokaroski

* Temporary

279

Madagascar

GovernorZaza Manitranja Ramandimbiarison

Alternate GovernorHenri Bernard Razakariasa

Malawi

GovernorFriday Jumbe

Alternate GovernorBingu Wa Mutharika

Malaysia

GovernorJamaludin Mohd Jarjis

Mali

GovernorBassary Toure

Alternate GovernorAboubacar Alhousseyni Toure

Malta

GovernorAnthony Abela

Mauritius

GovernorKhushhal Chand Khushiram

Alternate GovernorAyub Hussein Nakhuda

Micronesia, Federated States of

GovernorSabino Asor

Moldova

Alternate GovernorDumitru Ursu

Mongolia

GovernorChultem Ulaan

Alternate GovernorTserendagva Odongua

Morocco

GovernorFathallah Oualalou

Mozambique

GovernorLuisa Dias Diogo

Alternate GovernorAdriano Afonso Maleiane

Namibia

Alternate GovernorGodfrey Gaoseb

Nepal

GovernorPrakash Chandra Lohani

Alternate GovernorBhanu Prasad Acharya

Netherlands, The

GovernorGerrit Zalm

Alternate GovernorAgnes van ArdenneAd Melkert*

Nicaragua

GovernorEduardo Montealegre Rivas

Alternate GovernorMario Alonso Icabalceta

Nigeria

GovernorErnest C. Ebi

Alternate GovernorHaruna Usman SanusiNasir El-Rufai*Ahmed Inuwa Wada*

Norway

GovernorHilde Frafjord Johnson

* Temporary

280

Alternate GovernorCecilie Landsverk*Trond Folke Lindberg*

Oman

GovernorAhmed Bin Abdulnabi Macki

Alternate GovernorSaud Nassir Al-Shukaily

Pakistan

GovernorNawid Ahsan

Palau

GovernorCasmir Remengesau

Panama

GovernorNorberto Delgado Duran

Alternate GovernorDomingo Latorraca

Papua New Guinea

GovernorBart Philemon

Alternate GovernorKoiari Tarata

Paraguay

Alternate GovernorJose Ernesto Buttner Limprich

Peru

GovernorJaime Quijandria Salmon

Alternate GovernorJavier Silva Ruete

Philippines

GovernorJose Isidro N. Camacho

Poland

GovernorJacek Tomorowicz

Alternate GovernorAgnieszka B. Rudniak-Jancewicz

Portugal

GovernorManuela Ferreira Leite

Alternate GovernorFrancisco Esteves de CarvalhoMario Lobo*

Qatar

GovernorYousef Hussain Kamal

Alternate GovernorAbdullah Bin Khalid Al-Attiyah

Romania

GovernorMihai Nicolae Tanasescu

Russian Federation

Alternate GovernorSergei Ignatiev*Andrei N. Illarionov*Sergei Kolotukhin*Alexey G. Kvasov*Aleksei Ulyukaev*Oleg Vyugin*

Rwanda

GovernorDonald Kaberuka

St. Kitts and Nevis

GovernorDenzil Douglas

Alternate GovernorWendell E. LawrenceVance Amory*

* Temporary

281

St. Lucia

Alternate GovernorTrevor Brathwaite

Samoa

GovernorTuu’u Anasii Leota

Alternate GovernorAtalina Emma Enari

Saudi Arabia

GovernorIbrahim A. Al-Assaf

Alternate GovernorHamad Al-SayariYahya Alyahya*

Senegal

GovernorAbdoulaye Diop

Serbia and Montenegro

GovernorMiroslav Ivanisevic

Alternate GovernorBozidar DjelicBranko Lukovac*

Seychelles

GovernorJeremie Bonnelame

Alternate GovernorFrancis Chang Leng

Sierra Leone

GovernorJoseph Bandabla Dauda

Alternate GovernorSamura Kamara

Singapore

GovernorLim Hng Kiang

Slovak Republic

GovernorIvan Miklos

Alternate GovernorElena Kohutikova

Slovenia

GovernorDusan Mramor

Alternate GovernorIrena SodinSibil Svilan*

South Africa

GovernorTrevor Andrew Manuel

Alternate GovernorM.B.M. Mpahlwa

Spain

GovernorRodrigo de Rato Figaredo

Alternate GovernorMaria Jesus Fernandez*

Sri Lanka

GovernorKairshasp Nariman Choksy

Alternate GovernorCharitha Ratwatte

Sudan

GovernorEl Zubair Ahmed El Hassan

Alternate GovernorAbda Y. El Mahdi

Suriname

GovernorHumphrey S. Hildenberg

Swaziland

Alternate GovernorEphraim Mandla Hlophe

* Temporary

282

Sweden

GovernorGunnar Lund

Switzerland

GovernorKaspar Villiger

Alternate GovernorSerge Chappatte*Christina Grieder*Pietro Veglio*

Syrian Arab Republic

GovernorGhassan El-Rifai

Tajikistan

GovernorNegmatdzhon KhikmatullayevichBuriyev

Tanzania

GovernorAbdallah Omar Kigoda

Alternate GovernorGray S. Mgonja

Thailand

GovernorVarathep Ratanakorn

Alternate GovernorSomchainuk EngtrakulNibhat Bhukkanasut*Vijit Supinit*

Timor-Leste

GovernorMaria Madalena Brites Boavida

Togo

GovernorM’ba Bilor Legzim

Alternate GovernorMewunesso Baliki Pini

Trinidad and Tobago

GovernorConrad Enill

Alternate GovernorLeroy Mayers

Tunisia

GovernorMohamed Nouri Jouini

Alternate GovernorAbdelhamid Triki

Turkey

GovernorIbrahim H. Canakci

Alternate GovernorMelih Nemli*

Turkmenistan

GovernorGurbanberdi Orazov

Uganda

GovernorGerald M. Ssendaula

Alternate GovernorC. M. Kassami

Ukraine

GovernorValeriy Khoroshkovskiy

United Arab Emirates

GovernorMohammed Khalfan Bin Khirbash

United Kingdom

GovernorValerie Amos

Alternate GovernorGordon BrownEd Balls*Martin Arnulf Brooke*Suma Chakrabarti*Jon Cunliffe*

* Temporary

283

Peter Grant*Gus O’Donnell*Stephen John Pickford*Tom Scholar*Rosemary Stevenson*

United States

GovernorJohn W. Snow

Alternate GovernorAlan P. LarsonCarole Brookins*Todd W. Crawford*Robert B. Holland*William Schuerch*John Taylor*

Uruguay

GovernorIsaac Alfie

Uzbekistan

Alternate GovernorZainutdin Mirkhodjaev*

Vanuatu

GovernorSela Molisa

Venezuela, Republica Bolivariana de

Alternate GovernorJorge Giordani

Vietnam

GovernorLe Duc Thuy

Alternate GovernorDang Anh Mai

Yemen, Republic of

GovernorAhmed Mohammed Sofan

Alternate GovernorMohammed Al-Sabbry

Zambia

GovernorN’gandu Peter Magande

Alternate GovernorSitumbeko Musokotwane

Zimbabwe

GovernorHerbert M. Murerwa

* Temporary

284

African Development Bank Group

Omar KabbajAhmed M.F. BahgatAbdirahman BeilehHenock KifleTheodore F. NkodoGuy Terracol

African Export-Import Bank

Christopher Chuka EdorduBenedict O. Oramah

African Fund for Guarantee and Economic Cooperation

Libasse SambAlimi Saliou IcholaHabib Soumana

African Union

Hamad Yassin El Nil

Andean Development Corporation

Luis Enrique Garcia RodriguezCarolina EspanaFidel JaramilloHugo Sarmiento

Arab Authority for AgriculturalInvestment and Development

Abdulkarim Mohammad Al-AmriAl-Shamsi

Rahma Yousef HalilullaLarbi HamdiHabib M. KaabachiYoussef Abdel Fattah MohamedRajagopal RamamoorthyAhmed Mohamed Shaker

Arab Bank for Economic Development in Africa

Medhat Sami LotfyKamal Mahmoud AbdellatifAhmed Abdallah AlakeilDriss AlandaloussiOuld Ebe Ebe

Arab Fund for Economic and Social Development

Abdlatif Y. Al-HamadAzzeddine BouchelaghemMervat Wahba El-BadawyHusam Omar Khalil

Arab Monetary Fund

Jassim Abdulla Al-MannaiSherif Abdel KhalekSalih Hamid AgbanIbrahim AkoumHazim Al-DalliShawket Abdul Hadi AleyanAli Tawfik Al-SadikGhassan Mouin BecharaAli Ahmad BolbolHazem Abd El Aziz El-BeblawiKamal ElsamkaryAziz GebaraMustapha KaraJamel Eddine Zarrouk

Asian Development Bank

Tadao ChinoMichael Peter BarrowRobert M. BestaniThierry de LonguemarPhilip C. ErquiagaStephen Paul GroffVeronica L. JohnYasushi KanzakiJohn LintjerBindu N. LohaniFrank J. PolmanEva L. RelovaEdgardo Pelagio RodriguezKunio SengaCraig M. Steffensen

Association of African DevelopmentFinance Institutions

Oluremi OmotosoDaniel GyimahVictor J. Nembelessini-SilueVianney J.M. NyirimihigoKenneth Edozie OgegbuLawrence Okeluc Osa-Afiana

OBSERVERS AT THE 2003 ANNUAL MEETINGS

Bank for International Settlements

Malcolm D. KnightSvein AndresenGavin BinghamLuca ErricoAndre IcardDaniele NouyRobert SleeperJosef TosovskyJosef Van’t DackWilliam R. White

Bank of Central African States

Mahamat AdoumPacifique IssoibekaAdam MadjiAndre Mfoula EdjomoAntoine Nkodia

Black Sea Trade and Development Bank

Mustafa Hamdi GurtinValery Vladimirovich AksenovVitalij Vasyliovych LisovenkoNejdet SarisozenValentina SiclovanPierre Nicolas van Peteghem

Caribbean Development Bank

Patrick Desmond Brunton

Center for Latin American Monetary Studies

Kenneth G. Coates

Central African States Development Bank

Anicet-Georges Dologuele

Central American Bank for Economic Integration

Harry BrautigamCarlos Americo BascoJaime ChavezRoberto PereiraNick Rischbieth

Central American Monetary Council

Miguel A. Chorro SerpasSergio F. Recinos Rivera

Common Fund for Commodities

Shunichi Hari

Common Market for Eastern and Southern Africa

Erastus J.O. MwenchaBernard de HaldevangAlex Gitari KwimenyaDonald Mark PearsonCyprien Sakubu

Commonwealth Secretariat

Winston CoxIndrajit CoomaraswamyEliawony J. Kisanga

Cooperation Council for the Arab States of the Gulf

Nasser Ibrahim Al-KaudMohamed Obaid Al-Mazrooei

Council of Europe Development Bank

Raphael AlomarNunzio GuglielminoOrhan GuvenenKrzysztof J. NersThierry PoirelRainer B. Steckhan

East African Community

Nuwe Amanya-MushegaDavid Sajjabi

East African Development Bank

Godfrey B. TumusiimeVivienne ApopoMahesh K. KotechaPeter Opande

Economic Community of West African States

Christian N. AdovelandeOluremi AribisalaKoffi M. KouakouFrank OfeiThierno Bocar TallJacques Francois Tokplo

285

286

European Bank for Reconstruction and Development

Steven D.F. KaempferWillem BuiterJulie Green

European Central Bank

Willem F. DuisenbergEugenio Domingo SolansOtmar IssingMichele KirstetterManfred J. KorberTommaso Padoa-SchioppaGeorges PineauOlaf C.H.M. Sleijpen

European Commission

Pedro Solbes MiraSoledad AbadAngelo BaglioHerve CarreDaniel A.A. DacoServaas DerooseKarl HarboGeert HeikensAlexander ItalianerPatricia Llombart CussacElisabeth Maria PapeBernard PhilippeKlaus P. ReglingKristian SchmidtEdouard VieillefondFokion Fotiadis

European Investment Bank(EIB Group)

Philippe de Fontaine ViveBarbara Bargagli-PetrucciJean-Louis BiancarelliTerence BrownRene KarsentiHelen KavvadiaFiona Turner

Inter-American Development Bank

Enrique V. IglesiasEuric Allan BobbEloy B. GarciaEsteban R.G. MolfinoCharles O. SethnessGabriela SotelaAnita A. Ruiz

Inter-Arab Investment Guarantee Corporation

Fahad R.H. Al IbrahimKhogali A. Abubakr

International Fund for Agricultural Development

Lennart BageUday AbhyankarSusan BaraldiRasha OmarDavid PaquiFawzi H. RihaneAbdelmajid Slama

International Labour Organization

Eddy LeeSamir M. Radwan

Islamic Development Bank

Ahmad Mohamed AliWalid AbdelwahabMohammad Al-AttarKarim AllaouiFaisal AlzamelSangone AmarAmadou Boubacar CisseAli DiabiEl Mansour Ould Veten FetenMohamed-Idriss GhodbaneOmar Zuhair HafizSalah-Eddine KandriSelim Cafer KaratashFaiz Mohammad MalikMohamed Ibrahim Mohamed AhmedDost M. QureshiZul-Kifl SalamiSuleiman Ahmad SalemMohameden Mohamed SidiyaAli A. SolimanSouhad ZahedZeinhom Antar Zahran

Islamic Financial Services Board

Rifaat Ahmed AbdelkarimMarlin Mohd. Faroque

Kuwait Fund for Arab EconomicDevelopment

Abdullah Sulaiman Al-AskariMuna Bader Alayyaf

Rana Ali Al-EssaMarwan Abdulla Al-GhanemGhanim Yousef Al-OtaibiYousef M. Al-Refae

Latin American Reserve Fund

Alfonso R. MachadoDennis H. Melendez

League of Arab States

Abdulrahman SehebaniMuatasem Suleiman

Nordic Development Fund

Jens Lund SorensenPer Eldar SovikStella Eckert

Nordic Investment Bank

Jon SigurdssonBo Heide-OttosenErkki A.O. KarmilaKari KukkaLars-Ake Gunnar OlssonRonsen Sten OddvarHeidi Susanne Syrjanen

OPEC Fund for InternationalDevelopment

Y. Seyyid AbdulaiSaid AissiSaleh Al-OmairIbrahim M.I. AlturkiUmar Gbode AminuJumana A.W. DejanyEdwin G. Gutierrez OrtegaNuri Mohamed RefaatBarbara Hausjell

Organisation for Economic Co-operationand Development

Donald J. JohnstonJean-Philippe CotisVincent R. KoenMehmet Ogutcu

OECD-Development AssistanceCommittee

Richard Manning

Organization of Arab PetroleumExporting Countries

Abdul-Aziz A. Al-TurkiJamil Tahir

P. L. O.

Salam K. FayyadAbdelaziz M. Abu-DaggaAbdulmajeed AlmashharawiAmin HaddadHani Hashem ShawaMohammad ShtayyehNaser Tahboub

Saudi Fund for Development

Saud A. Abdul HadiMesfer F. Al-MesferMohammad Abdullah Al-Shawi

Southern African DevelopmentCommunity

Thembimicosi Mhlongo

United Nations

Suzanne BishopricLakhdar BrahimiFarooq ChowdhuryManoel de Almeida e SilvaDavid HaeriEveline HerfkensIan KinniburghEduardo Christian OssaTarek ShayyaEva Margareta Wahlstrom

UN Children’s Fund

Carel de RooyAnupama Rao Singh

UN Conference on Trade andDevelopment

Pierre EncontreHeiner Flassbeck

UN Development Programme

Zephirin DiabreNadir Hadj-HammouDavid LockwoodRenaud Meyer

287

288

Hala MouneimneErcan MuratG. Ravi RajanJulia Taft

UN Economic Commission for Africa

Kingsley Y. AmoakoElene MakonnenAli Todaro

UN Economic and Social Commission for Western Asia

Nabil Abou DarghamAhmed Samerai

United Nations Educational, Scientific,and Cultural Organization

Usam Isa GhaidanJo HironakaMir Asghar Husain

West African Development Bank

Yao Agbo N’De Hounouvi

West African Economic and Monetary Union

Frederic Assomption KorsagaJoachim Ouedraogo

West African Monetary Institute

Michael Olufemi OjoPeter J. Obaseki

World Health Organization

Katja Janovsky

World Trade Organization

Karen McCuskerFrancisco Thompson-Flores

Singapore Planning Team for 2006 Annual Meetings

Venkataraman AnantharamanDavid S. BeeversWarren James BuckleyChee Chean WeeChiam Choong JukeChu Pau WahFoo Jacky Kong SengGoh Bob Kee LeongHeng Margaret Chee BeeKrishnasamy BhavaniEddy LagmanLee Gerald Hwee KeongLee Hwee HongLim Cheng HoeLim Keng HoeLim Kok PengLim Lee LeeLim Wee LengMok Doris Chck FongNg Bee ThengNg Nam SinOng Veronica Lay FongOw Catherine Pek WanDevendran SelvarajooShih-Teo Siew PohPatrick SimSim Tristan Tong PingRamcharan Gill SinghTan Dave Hon KiatTan Irene Peck LingTan Kim SengTan Kok HoeTan Maggie Pin NeoTan Peng KuanTan Simon Eng HuTay Chng YeowTay Yong MengTeo Puay TinTeo Sze BoonTeo Thiam HweeEric Wee Teck YapYeo Ai LengAlice Yeo

289

Executive Directors Alternate Executive Directors

Tanwir Ali Agha Sid Ahmed Dib(Pakistan) (Algeria)

Mahdy Ismail Aljazzaf Mohamed Kamel Amr(Kuwait) (Arab Republic of Egypt)

Yahya Alyahya Abdulrahman Mohammed Almofadhi(Saudi Arabia) (Saudi Arabia)

Rapee Asumpinpong Hadiyanto(Thailand) (Indonesia)

John Austin Terrence K. O’Brien(New Zealand) (Australia)

Kurt Bayer Gino Alzetta(Austria) (Belgium)

Amaury Bier Gil S. Beltran(Brazil) (Philippines)

Franco Passacantando Nuno Mota Pinto(Italy) (Portugal)

Carole Brookins Robert B. Holland(United States) (United States)

Eckhard Deutscher Walter E. Hermann(Germany) (Germany)

Pierre Duquesne Anthony Requin(France) (France)

Paulo F. Gomes Philippe Ong Seng(Guinea-Bissau) (Mauritius)

Alieto Guadagni Alfonso C. Revollo(Argentina) (Bolivia)

EXECUTIVE DIRECTORS AND ALTERNATES IBRD, IFC, IDA

September 23–24, 2003

Executive Directors Alternate Executive Directors

Yuzo Harada Toshio Oya(Japan) (Japan)

Finn Jonk Inkeri Hirvensalo(Denmark) (Finland)

Louis A. Kasekende J. Mills Jones(Uganda) (Liberia)

Per Kurowski Maria Jesus Fernandez(Rep. Bolivariana Venezuela) (Spain)

Alexey G. Kvasov Eugene Miagkov(Russian Federation) (Russian Federation)

Marcel Masse Sharon Weber(Canada) (Jamaica)

Ad Melkert Tamara Solyanyk(The Netherlands) (Ukraine)

Tom Scholar Rosemary Stevenson(United Kingdom) (United Kingdom)

Chander Mohan Vasudev Akbar Ali Khan(India) (Bangladesh)

Pietro Veglio Jakub Karnowski(Switzerland) (Republic of Poland)

Zhu Guangyao Wu Jinkang(People’s Republic of China) (People’s Republic of China)

290

291

Directors Alternate Directors

Tanwir Ali Agha Sid Ahmed Dib(Pakistan) (Algeria)

Mahdy Ismail Aljazzaf Mohamed Kamel Amr(Kuwait) (Arab Republic of Egypt)

Yahya Alyahya Abdulrahman Mohammed Almofadhi(Saudi Arabia) (Saudi Arabia)

Gino Alzetta Kurt Bayer(Belgium) (Austria)

Rapee Asumpinpong Hadiyanto(Thailand) (Indonesia)

John Austin Terrence K. O’Brien(New Zealand) (Australia)

Amaury Bier Gil S. Beltran(Brazil) (Philippines)

Franco Passacantando Nuno Mota Pinto(Italy) (Portugal)

Carole Brookins Robert B. Holland(United States) (United States)

Eckhard Deutscher Walter E. Hermann(Germany) (Germany)

Pierre Duquesne Anthony Requin(France) (France)

Paulo F. Gomes Philippe Ong Seng(Guinea-Bissau) (Mauritius)

Alieto Guadagni Alfonso C. Revollo(Argentina) (Bolivia)

DIRECTORS AND ALTERNATESMIGA

September 23–24, 2003

292

Directors Alternate Directors

Yuzo Harada Masakazu Ichikawa(Japan) (Japan)

Finn Jonk Inkeri Hirvensalo(Denmark) (Finland)

Louis A. Kasekende J. Mills Jones(Uganda) (Liberia)

Per Kurowski Maria Jesus Fernandez(Republica Bolivariana de Venezuela) (Spain)

Alexey G. Kvasov Eugene Miagkov(Russian Federation) (Russian Federation)

Marcel Masse Sharon Weber(Canada) (Jamaica)

Ad Melkert Tamara Solyanyk(The Netherlands) (Ukraine)

Tom Scholar Rosemary Stevenson(United Kingdom) (United Kingdom)

Chander Mohan Vasudev Akbar Ali Khan(India) (Bangladesh)

Pietro Veglio Jakub Karnowski(Switzerland) (Republic of Poland)

Zhu Guangyao Wu Jinkang(People’s Republic of China) (People’s Republic of China)

293

Chairman. . . . . . . . . . . . . . . . . . . . . . . . . SingaporeVice Chairmen . . . . . . . . . . . . . . . . . . . . . Barbados

Greece

Reporting Member . . . . . . . . . . . . . . . . . Nigeria

Members . . . . . . . . . . . . . . . . . . . . . . . . . BarbadosBelgiumChinaColombiaDemocratic Republic of CongoFranceGabonGermanyGreeceGuatemalaJapanNigeriaNorwayPapua New GuineaParaguaySaudi ArabiaSingaporeSpainUkraineUnited KingdomUnited StatesYemenZambia

OFFICERS OFTHE BOARDS OF GOVERNORS

IBRD, IFC AND IDAAND JOINT PROCEDURES COMMITTEE

FOR 2003/2004

294

Chairman . . . . . . . . . . . . . . . . . . . . . . . . . SingaporeVice Chairmen . . . . . . . . . . . . . . . . . . . . . Barbados

Greece

Reporting Member . . . . . . . . . . . . . . . . . Nigeria

Members . . . . . . . . . . . . . . . . . . . . . . . . . BarbadosBelgiumChinaColombiaDemocratic Republic of CongoFranceGabonGermanyGreeceGuatemalaJapanNigeriaNorwayPapua New GuineaParaguaySaudi ArabiaSingaporeSpainUkraineUnited KingdomUnited StatesYemenZambia

OFFICERS OFTHE MIGA COUNCIL OF GOVERNORS

AND PROCEDURES COMMITTEEFOR 2003/2004

Summary Proceedings - The World...

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